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Shopify (SHOP) Gains But Lags Market: What You Should Know

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In the latest trading session, Shopify (SHOP - Free Report) closed at $705, marking a +0.2% move from the previous day. This change lagged the S&P 500's 1.43% gain on the day. At the same time, the Dow added 1.02%, and the tech-heavy Nasdaq gained 0.32%.

Coming into today, shares of the cloud-based commerce company had gained 12.28% in the past month. In that same time, the Computer and Technology sector gained 5.48%, while the S&P 500 gained 5.65%.

Investors will be hoping for strength from Shopify as it approaches its next earnings release. In that report, analysts expect Shopify to post earnings of $0.78 per share. This would mark a year-over-year decline of 61.19%. Our most recent consensus estimate is calling for quarterly revenue of $1.26 billion, up 26.97% from the year-ago period.

SHOP's full-year Zacks Consensus Estimates are calling for earnings of $3.27 per share and revenue of $6.05 billion. These results would represent year-over-year changes of -48.99% and +31.2%, respectively.

Investors might also notice recent changes to analyst estimates for Shopify. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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. The Zacks Consensus EPS estimate has moved 24.3% lower within the past month. Shopify currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Shopify has a Forward P/E ratio of 215.43 right now. Its industry sports an average Forward P/E of 23.52, so we one might conclude that Shopify is trading at a premium comparatively.

Investors should also note that SHOP has a PEG ratio of 6.69 right now. 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. SHOP's industry had an average PEG ratio of 2.4 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 197, which puts it in the bottom 23% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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