Back to top

Image: Bigstock

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

Read MoreHide Full Article

Square (SQ - Free Report) closed at $239.12 in the latest trading session, marking a +1.33% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.41%.

Prior to today's trading, shares of the mobile payments services provider had lost 11.23% over the past month. This has lagged the Computer and Technology sector's loss of 7.83% and the S&P 500's loss of 4.08% in that time.

Investors will be hoping for strength from SQ as it approaches its next earnings release. The company is expected to report EPS of $0.39, up 14.71% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.58 billion, up 50.83% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.84 per share and revenue of $18.89 billion, which would represent changes of +119.05% and +98.89%, respectively, from the prior year.

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. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. SQ is currently a Zacks Rank #1 (Strong Buy).

Looking at its valuation, SQ is holding a Forward P/E ratio of 128.41. This valuation marks a premium compared to its industry's average Forward P/E of 57.1.

Also, we should mention that SQ has a PEG ratio of 4.09. 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. The Internet - Software was holding an average PEG ratio of 4.09 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 167, which puts it in the bottom 35% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


See More Zacks Research for These Tickers


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


Block, Inc. (SQ) - free report >>

Published in