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

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Square (SQ - Free Report) closed at $183.50 in the latest trading session, marking a +1.84% move from the prior day. This change outpaced the S&P 500's 0.8% gain on the day. At the same time, the Dow added 0.43%, and the tech-heavy Nasdaq gained 0.5%.

SQ will be looking to display strength as it nears its next earnings release, which is expected to be November 5, 2020. In that report, analysts expect SQ to post earnings of $0.13 per share. This would mark a year-over-year decline of 48%. Meanwhile, our latest consensus estimate is calling for revenue of $1.99 billion, up 57.36% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.52 per share and revenue of $7.06 billion, which would represent changes of -35% and +49.83%, respectively, from the prior year.

Any recent changes to analyst estimates for SQ should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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, 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 11.98% higher. SQ is currently sporting a Zacks Rank of #1 (Strong Buy).

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 347.61. For comparison, its industry has an average Forward P/E of 81.37, which means SQ is trading at a premium to the group.

Meanwhile, SQ's PEG ratio is currently 8.5. 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. The Internet - Software industry currently had an average PEG ratio of 6.37 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 171, putting it in the bottom 33% 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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