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Still trading well off their 52-week highs, Shopify (SHOP - Free Report) ) and ZoomInfo Technologies (ZI - Free Report) ) are two growth stocks among the broader technology sector that may be intriguing to investors in hopes of a continued rebound.
Despite a tremulous 2022, the Nasdaq is up 11% year to date, and Salesforce’s (CRM - Free Report) ) strong fourth-quarter report and guidance last Wednesday certainly gave a boost to tech stocks regarding sentiment and momentum.
While Salesforce has been a cream-of-the-crop example of growth among technology companies, it does pose the question of if Shopify and ZoomInfo can also grow expansively. Furthermore, investors are always looking for tech stocks with an abundance of upside, so let’s see if Shopify and ZoomInfo fit the bill.
Image Source: Zacks Investment Research
Shopify Business Model
Shopify went public in 2015, with the Canada-based company providing its multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses (SMBs). Shopify’s software is used by merchants to run their businesses across various sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces.
Through Shopify’s platform, businesses can manage products and inventory, process orders and payments, ship orders, build customer relationships, leverage analytics, and report from one integrated back office.
Image Source: Zacks Investment Research
ZoomInfo Business Model
Pivoting to ZoomInfo, which launched its IPO more recently in 2020 as an operator of a cloud-based technology platform that offers information and insight on organizations and professionals primarily in the U.S. and internationally.
ZoomInfo’s platform is used for market intelligence by sales and marketing teams. Through the use of artificial intelligence and machine learning techniques, ZoomInfo processes data that can be used as actionable insights to boost profits for many businesses.
ZoomInfo serves a variety of markets including business services, telecommunications, financial services, retail, transportation, healthcare, and the broader hospitality industry among others.
Image Source: Zacks Investment Research
Oversold Territory?
Taking a look at Shopify and ZoomInfo’s performance and valuation will help get a better gauge of whether their stocks are oversold following a tough 2022 for tech stocks.
In this regard, ZI stock sticks out right away down -51% over the last year to largely underperform SHOP’s -28%, the Nasdaq’s -12%, and the S&P 500’s -8%. Over the last two years and shortly after ZoomInfo went public, ZI stock is now down -43% Vs. SHOP’s -62% with both trailing the broader indexes.
Image Source: Zacks Investment Research
Trading at $43 a share, Shopify stock is 43% off its 52-week highs seen last March. In contrast, ZoomInfo shares trade at $25 and are 71% from highs also seen last March. With both companies having strong business models but in the beginning stages of probability looking at their price to sales is a good way to gauge the premium paid for their stocks.
Image Source: Zacks Investment Research
Both Shopify and ZoomInfo have a P/S ratio of 7.5X which is above the optimum level of less than 2X but has nicely descended from their highs over the last two years as shown in the above chart.
Still, with Shopify’s industry average at 3.9X P/S and ZoomInfo’s Industry average at 1.3X investors are paying a high premium for their stocks and there could be better buying opportunities ahead in this regard.
Shopify Outlook
Shopify earnings are now forecasted to dip -50% in fiscal 2023 to $0.02 per share compared to $0.04 a share in 2022. However, FY24 EPS is expected to rebound and soar more than 2,000% at $0.54. Earnings estimates are slightly down for FY23 but have gone up 50% for FY24 throughout the quarter.
On the top line, sales are projected to jump 19% this year and climb another 22% in FY24 to $8.11 billion. More impressive, fiscal 2024 would be a 416% increase from pre-pandemic levels with 2019 sales at $1.57 billion.
Image Source: Zacks Investment Research
ZoomInfo Outlook
Turning to ZoomInfo, earnings are expected to rise 12% this year and jump another 18% in FY24 at $1.17 per share. Earnings estimates are slightly up for FY23 but have trended down for FY24 over the last 90 days.
Sales are forecasted to be up 16% in FY23 and climb another 18% in FY24 to $1.52 billion. Plus, fiscal 2024 would be a 418% increase from pre-pandemic levels with 2019 sales at $293 million.
Image Source: Zacks Investment Research
Takeaway
Shopify and ZoomInfo Stock currently land a Zacks Rank #3 (Hold). The top and bottom line growth of both companies is attractive but their valuation is not as intriguing despite trading well off of their 52-week highs.
However, investors may be rewarded for holding on to shares of SHOP and ZI at their current levels. Shopify and ZoomInfo appear to have strong business models and this could catapult their growth in the years to come. The optimism that surrounded both stocks in recent years may also return as inflation and broader economic concerns subside which has been stressful for most tech companies
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Buy the Dip in These Tech Stocks for Growth?
Still trading well off their 52-week highs, Shopify (SHOP - Free Report) ) and ZoomInfo Technologies (ZI - Free Report) ) are two growth stocks among the broader technology sector that may be intriguing to investors in hopes of a continued rebound.
Despite a tremulous 2022, the Nasdaq is up 11% year to date, and Salesforce’s (CRM - Free Report) ) strong fourth-quarter report and guidance last Wednesday certainly gave a boost to tech stocks regarding sentiment and momentum.
While Salesforce has been a cream-of-the-crop example of growth among technology companies, it does pose the question of if Shopify and ZoomInfo can also grow expansively. Furthermore, investors are always looking for tech stocks with an abundance of upside, so let’s see if Shopify and ZoomInfo fit the bill.
Image Source: Zacks Investment Research
Shopify Business Model
Shopify went public in 2015, with the Canada-based company providing its multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses (SMBs). Shopify’s software is used by merchants to run their businesses across various sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces.
Through Shopify’s platform, businesses can manage products and inventory, process orders and payments, ship orders, build customer relationships, leverage analytics, and report from one integrated back office.
Image Source: Zacks Investment Research
ZoomInfo Business Model
Pivoting to ZoomInfo, which launched its IPO more recently in 2020 as an operator of a cloud-based technology platform that offers information and insight on organizations and professionals primarily in the U.S. and internationally.
ZoomInfo’s platform is used for market intelligence by sales and marketing teams. Through the use of artificial intelligence and machine learning techniques, ZoomInfo processes data that can be used as actionable insights to boost profits for many businesses.
ZoomInfo serves a variety of markets including business services, telecommunications, financial services, retail, transportation, healthcare, and the broader hospitality industry among others.
Image Source: Zacks Investment Research
Oversold Territory?
Taking a look at Shopify and ZoomInfo’s performance and valuation will help get a better gauge of whether their stocks are oversold following a tough 2022 for tech stocks.
In this regard, ZI stock sticks out right away down -51% over the last year to largely underperform SHOP’s -28%, the Nasdaq’s -12%, and the S&P 500’s -8%. Over the last two years and shortly after ZoomInfo went public, ZI stock is now down -43% Vs. SHOP’s -62% with both trailing the broader indexes.
Image Source: Zacks Investment Research
Trading at $43 a share, Shopify stock is 43% off its 52-week highs seen last March. In contrast, ZoomInfo shares trade at $25 and are 71% from highs also seen last March. With both companies having strong business models but in the beginning stages of probability looking at their price to sales is a good way to gauge the premium paid for their stocks.
Image Source: Zacks Investment Research
Both Shopify and ZoomInfo have a P/S ratio of 7.5X which is above the optimum level of less than 2X but has nicely descended from their highs over the last two years as shown in the above chart.
Still, with Shopify’s industry average at 3.9X P/S and ZoomInfo’s Industry average at 1.3X investors are paying a high premium for their stocks and there could be better buying opportunities ahead in this regard.
Shopify Outlook
Shopify earnings are now forecasted to dip -50% in fiscal 2023 to $0.02 per share compared to $0.04 a share in 2022. However, FY24 EPS is expected to rebound and soar more than 2,000% at $0.54. Earnings estimates are slightly down for FY23 but have gone up 50% for FY24 throughout the quarter.
On the top line, sales are projected to jump 19% this year and climb another 22% in FY24 to $8.11 billion. More impressive, fiscal 2024 would be a 416% increase from pre-pandemic levels with 2019 sales at $1.57 billion.
Image Source: Zacks Investment Research
ZoomInfo Outlook
Turning to ZoomInfo, earnings are expected to rise 12% this year and jump another 18% in FY24 at $1.17 per share. Earnings estimates are slightly up for FY23 but have trended down for FY24 over the last 90 days.
Sales are forecasted to be up 16% in FY23 and climb another 18% in FY24 to $1.52 billion. Plus, fiscal 2024 would be a 418% increase from pre-pandemic levels with 2019 sales at $293 million.
Image Source: Zacks Investment Research
Takeaway
Shopify and ZoomInfo Stock currently land a Zacks Rank #3 (Hold). The top and bottom line growth of both companies is attractive but their valuation is not as intriguing despite trading well off of their 52-week highs.
However, investors may be rewarded for holding on to shares of SHOP and ZI at their current levels. Shopify and ZoomInfo appear to have strong business models and this could catapult their growth in the years to come. The optimism that surrounded both stocks in recent years may also return as inflation and broader economic concerns subside which has been stressful for most tech companies