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

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Shopify (SHOP - Free Report) closed at $66.10 in the latest trading session, marking a +0.33% move from the prior day. The stock lagged the S&P 500's daily gain of 1.22%. At the same time, the Dow added 1.26%, and the tech-heavy Nasdaq gained 4.63%.

Prior to today's trading, shares of the cloud-based commerce company had gained 8.43% over the past month. This has lagged the Computer and Technology sector's gain of 12.34% and outpaced the S&P 500's gain of 6.22% in that time.

Wall Street will be looking for positivity from Shopify as it approaches its next earnings report date. On that day, Shopify is projected to report earnings of $0 per share, which would represent year-over-year growth of 100%. Our most recent consensus estimate is calling for quarterly revenue of $1.62 billion, up 25.11% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.06 per share and revenue of $6.74 billion, which would represent changes of +50% and +20.38%, respectively, from the prior year.

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.

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.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Shopify currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, Shopify is holding a Forward P/E ratio of 1109.56. This represents a premium compared to its industry's average Forward P/E of 24.89.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 66, putting it in the top 27% 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.

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


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