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

Zacks Equity Research

In the latest trading session, Square (SQ) closed at $98.27, marking a +1.28% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.06%. Elsewhere, the Dow lost 0.15%, while the tech-heavy Nasdaq added 0.33%.

Wall Street will be looking for positivity from SQ as it approaches its next earnings report date. The company is expected to report EPS of -$0.11, down 152.38% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.11 billion, down 5.39% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.14 per share and revenue of $5.11 billion. These totals would mark changes of -82.5% and +8.33%, respectively, from last year.

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. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 18.36% lower. SQ is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 701.42. This represents a premium compared to its industry's average Forward P/E of 56.6.

Investors should also note that SQ has a PEG ratio of 46.33 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. SQ's industry had an average PEG ratio of 3.48 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 42, which puts it in the top 17% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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