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

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Zacks Equity Research
·3 min read
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Square (SQ) closed at $240.38 in the latest trading session, marking a +1.12% move from the prior day. This change outpaced the S&P 500's 0.39% gain on the day. At the same time, the Dow added 0.3%, and the tech-heavy Nasdaq gained 0.57%.

Heading into today, shares of the mobile payments services provider had lost 0.73% over the past month, lagging the Computer and Technology sector's gain of 9.84% and the S&P 500's gain of 4.69% in that time.

SQ will be looking to display strength as it nears its next earnings release, which is expected to be February 23, 2021. In that report, analysts expect SQ to post earnings of $0.23 per share. This would mark no growth from the year-ago period. Our most recent consensus estimate is calling for quarterly revenue of $3.10 billion, up 136.24% from the year-ago period.

It is also important to note the 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. 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.

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. The Zacks Consensus EPS estimate has moved 8.47% higher within the past month. SQ is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that SQ has a Forward P/E ratio of 218.09 right now. Its industry sports an average Forward P/E of 90.78, so we one might conclude that SQ is trading at a premium comparatively.

We can also see that SQ currently has a PEG ratio of 6.61. 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. Internet - Software stocks are, on average, holding a PEG ratio of 5.07 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 200, putting it in the bottom 22% 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.

To follow SQ in the coming trading sessions, be sure to utilize Zacks.com.

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Square, Inc. (SQ) : Free Stock Analysis Report
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Zacks Investment Research