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Square (SQ) Gains As Market Dips: What You Should Know

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In the latest trading session, Square (SQ - Free Report) closed at $74.40, marking a +0.39% move from the previous day. This move outpaced the S&P 500's daily loss of 0.21%. Meanwhile, the Dow lost 0.09%, and the Nasdaq, a tech-heavy index, lost 0.18%.

Prior to today's trading, shares of the mobile payments services provider had gained 3% over the past month. This has outpaced the Computer and Technology sector's gain of 2.89% and the S&P 500's gain of 1.81% in that time.

SQ will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of -$0.05, down 25% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $927.49 million, up 38.72% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.14 per share and revenue of $4.39 billion. These totals would mark changes of +593.75% and +33.08%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for SQ. These recent revisions tend to reflect the evolving nature of short-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. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 69.9% higher. SQ is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 100.88. Its industry sports an average Forward P/E of 53, so we one might conclude that SQ is trading at a premium comparatively.

Also, we should mention that SQ has a PEG ratio of 4.04. 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. The Internet - Software was holding an average PEG ratio of 2.87 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 45, which puts it in the top 18% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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