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Square (SQ) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Square (SQ) closed at $39.99 in the latest trading session, marking a +1.24% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.47%. Elsewhere, the Dow gained 0.95%, while the tech-heavy Nasdaq added 2.3%.

Coming into today, shares of the mobile payments services provider had lost 53.66% in the past month. In that same time, the Computer and Technology sector lost 28.18%, while the S&P 500 lost 28.7%.

Wall Street will be looking for positivity from SQ as it approaches its next earnings report date. In that report, analysts expect SQ to post earnings of $0.17 per share. This would mark year-over-year growth of 54.55%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.35 billion, up 40.47% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.91 per share and revenue of $5.98 billion. These totals would mark changes of +13.75% and +26.94%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for SQ. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 128.77% higher. SQ currently has a Zacks Rank of #2 (Buy).

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 43.22. For comparison, its industry has an average Forward P/E of 26.33, which means SQ is trading at a premium to the group.

We can also see that SQ currently has a PEG ratio of 1.79. 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 1.81 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 106, putting it in the top 42% 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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