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Square (SQ) Gains As Market Dips: What You Should Know

Zacks Equity Research
Activision Blizzard (ATVI) closed the most recent trading day at $46.75, moving +0.52% from the previous trading session.

Square (SQ) closed the most recent trading day at $72.69, moving +0.57% from the previous trading session. This change outpaced the S&P 500's 0.22% loss on the day. Meanwhile, the Dow lost 0.08%, and the Nasdaq, a tech-heavy index, lost 0.36%.

Heading into today, shares of the mobile payments services provider had gained 14.51% over the past month, outpacing the Computer and Technology sector's gain of 10.66% and the S&P 500's gain of 8.17% in that time.

Investors will be hoping for strength from SQ as it approaches its next earnings release, which is expected to be February 27, 2019. On that day, SQ is projected to report earnings of $0.13 per share, which would represent year-over-year growth of 62.5%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $909.18 million, up 47.58% from the year-ago period.

Any recent changes to analyst estimates for SQ should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. SQ is currently sporting a Zacks Rank of #2 (Buy).

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 103.83. Its industry sports an average Forward P/E of 54.21, so we one might conclude that SQ is trading at a premium comparatively.

Investors should also note that SQ has a PEG ratio of 4.15 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SQ's industry had an average PEG ratio of 2.83 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 37, putting it in the top 15% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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