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Shopify (SHOP) Stock Sinks As Market Gains: What You Should Know

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In the latest trading session, Shopify (SHOP - Free Report) closed at $1,520.22, marking a -1.16% move from the previous day. This change lagged the S&P 500's 0.34% gain on the day.

Coming into today, shares of the cloud-based commerce company had gained 24.97% in the past month. In that same time, the Computer and Technology sector gained 5.91%, while the S&P 500 gained 2.71%.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. In that report, analysts expect SHOP to post earnings of $0.97 per share. This would mark a year-over-year decline of 7.62%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.03 billion, up 43.98% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.25 per share and revenue of $4.36 billion, which would represent changes of +6.78% and +48.69%, respectively, from the prior year.

Any recent changes to analyst estimates for SHOP should also be noted by investors. 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.

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.

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 remained stagnant. SHOP currently has a Zacks Rank of #3 (Hold).

Digging into valuation, SHOP currently has a Forward P/E ratio of 361.83. Its industry sports an average Forward P/E of 31.15, so we one might conclude that SHOP is trading at a premium comparatively.

Investors should also note that SHOP has a PEG ratio of 14.47 right now. 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 was holding an average PEG ratio of 1.91 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 231, putting it in the bottom 10% 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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