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

Zacks Equity Research
In the latest trading session, Citigroup (C) closed at $67.41, marking a -0.82% move from the previous day.

Square (SQ) closed the most recent trading day at $56.14, moving +1.48% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.86%. Meanwhile, the Dow gained 1.14%, and the Nasdaq, a tech-heavy index, added 0.38%.

Coming into today, shares of the mobile payments services provider had lost 20.85% in the past month. In that same time, the Computer and Technology sector lost 5.08%, while the S&P 500 lost 7.55%.

SQ will be looking to display strength as it nears its next earnings release, which is expected to be February 26, 2019. The company is expected to report EPS of $0.13, up 62.5% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $909.18 million, up 47.58% from the year-ago period.

SQ's full-year Zacks Consensus Estimates are calling for earnings of $0.46 per share and revenue of $3.26 billion. These results would represent year-over-year changes of +70.37% and +47.4%, respectively.

It is also important to note the recent changes to analyst estimates for SQ. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Over the past month, the Zacks Consensus EPS estimate has moved 14.29% lower. SQ is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note SQ's current valuation metrics, including its Forward P/E ratio of 120.42. For comparison, its industry has an average Forward P/E of 44.99, which means SQ is trading at a premium to the group.

Also, we should mention that SQ has a PEG ratio of 4.82. 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. The Internet - Software was holding an average PEG ratio of 2.75 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 26, which puts it in the top 10% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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