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Square (SQ) Dips More Than Broader Markets: What You Should Know

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Square (SQ - Free Report) closed at $270.94 in the latest trading session, marking a -1.84% move from the prior day. This change lagged the S&P 500's daily loss of 0.03%. At the same time, the Dow added 0.29%, and the tech-heavy Nasdaq lost 0.58%.

Prior to today's trading, shares of the mobile payments services provider had gained 19.76% over the past month. This has outpaced the Computer and Technology sector's gain of 11.29% and the S&P 500's gain of 4.45% in that time.

Investors will be hoping for strength from SQ as it approaches 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 prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $3.10 billion, up 136.24% from the year-ago period.

Investors should also note any recent changes to analyst estimates for SQ. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 14.88% lower. SQ is currently a Zacks Rank #3 (Hold).

Investors should also note SQ's current valuation metrics, including its Forward P/E ratio of 251.46. Its industry sports an average Forward P/E of 90.93, so we one might conclude that SQ is trading at a premium comparatively.

Meanwhile, SQ's PEG ratio is currently 7.62. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SQ's industry had an average PEG ratio of 5.17 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 181, putting it in the bottom 30% 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 Zacks.com.


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