Back to top

Image: Bigstock

Shopify (SHOP) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

Shopify (SHOP - Free Report) closed at $974.41 in the latest trading session, marking a +0.58% move from the prior day. This change lagged the S&P 500's 1.34% gain on the day. At the same time, the Dow added 2.13%, and the tech-heavy Nasdaq gained 0.94%.

Prior to today's trading, shares of the cloud-based commerce company had gained 20.27% over the past month. This has outpaced the Computer and Technology sector's gain of 7.45% and the S&P 500's gain of 3.92% in that time.

SHOP will be looking to display strength as it nears its next earnings release, which is expected to be July 29, 2020. The company is expected to report EPS of -$0.02, down 114.29% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $498.22 million, up 37.64% from the prior-year quarter.

SHOP's full-year Zacks Consensus Estimates are calling for earnings of $0.51 per share and revenue of $2.16 billion. These results would represent year-over-year changes of +70% and +36.92%, respectively.

Investors might also notice recent changes to analyst estimates for SHOP. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. Within the past 30 days, our consensus EPS projection has moved 0.18% higher. SHOP is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, SHOP currently has a Forward P/E ratio of 1891.78. This represents a premium compared to its industry's average Forward P/E of 34.28.

Also, we should mention that SHOP has a PEG ratio of 55.68. 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 - Services industry currently had an average PEG ratio of 2.81 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 154, which puts it in the bottom 40% 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.

Be sure to follow all of these stock-moving metrics, and many more, on

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Shopify Inc. (SHOP) - free report >>

Published in