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

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Shopify (SHOP - Free Report) closed at $145.44 in the latest trading session, marking a +0.73% move from the prior day. The stock lagged the S&P 500's daily gain of 0.97%. At the same time, the Dow added 1.09%, and the tech-heavy Nasdaq gained 1.08%.

Heading into today, shares of the cloud-based commerce company had lost 4.69% over the past month, lagging the Computer and Technology sector's loss of 2.56% and the S&P 500's loss of 3.04% in that time.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. This is expected to be February 21, 2019. In that report, analysts expect SHOP to post earnings of $0.21 per share. This would mark year-over-year growth of 40%. Meanwhile, our latest consensus estimate is calling for revenue of $327.13 million, up 46.82% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for SHOP. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 1.98% lower within the past month. SHOP is currently a Zacks Rank #5 (Strong Sell).

Looking at its valuation, SHOP is holding a Forward P/E ratio of 214.19. Its industry sports an average Forward P/E of 25.75, so we one might conclude that SHOP is trading at a premium comparatively.

We can also see that SHOP currently has a PEG ratio of 9.05. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Services industry currently had an average PEG ratio of 1.9 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 184, which puts it in the bottom 28% 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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