Back to top

Image: Bigstock

Shopify (SHOP) Dips More Than Broader Markets: What You Should Know

Read MoreHide Full Article

Shopify (SHOP - Free Report) closed the most recent trading day at $1,131.17, moving -1.16% from the previous trading session. This change lagged the S&P 500's daily loss of 0.14%. Elsewhere, the Dow lost 0.45%, while the tech-heavy Nasdaq lost 0.02%.

Prior to today's trading, shares of the cloud-based commerce company had lost 21.7% over the past month. This has lagged the Computer and Technology sector's loss of 5.82% and the S&P 500's loss of 0.13% in that time.

Wall Street will be looking for positivity from Shopify as it approaches its next earnings report date. In that report, analysts expect Shopify to post earnings of $1.42 per share. This would mark a year-over-year decline of 10.13%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.35 billion, up 38.14% from the year-ago period.

Investors should also note any recent changes to analyst estimates for Shopify. 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. 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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. Shopify is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, Shopify is holding a Forward P/E ratio of 164.66. This valuation marks a premium compared to its industry's average Forward P/E of 24.15.

It is also worth noting that SHOP currently has a PEG ratio of 5.11. 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. Internet - Services stocks are, on average, holding a PEG ratio of 3.08 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 211, which puts it in the bottom 18% 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.

To follow SHOP in the coming trading sessions, be sure to utilize Zacks.com.


In-Depth Zacks Research for the Tickers Above


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


Shopify Inc. (SHOP) - free report >>

Published in