Back to top

Image: Bigstock

Square (SQ) Outpaces Stock Market Gains: What You Should Know

Read MoreHide Full Article

In the latest trading session, Square (SQ) closed at $80.17, marking a +1.66% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.73%. Elsewhere, the Dow gained 0.6%, while the tech-heavy Nasdaq added 1.13%.

Heading into today, shares of the mobile payments services provider had gained 16.09% over the past month, outpacing the Computer and Technology sector's gain of 5.28% and the S&P 500's gain of 2.95% in that time.

Wall Street will be looking for positivity from SQ as it approaches its next earnings report date. This is expected to be February 26, 2020. The company is expected to report EPS of $0.21, up 50% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.18 billion, up 26.97% from the year-ago period.

Investors might also notice recent changes to analyst estimates for SQ. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 22.22% lower. SQ is currently a Zacks Rank #3 (Hold).

Investors should also note SQ's current valuation metrics, including its Forward P/E ratio of 85.08. For comparison, its industry has an average Forward P/E of 51.26, which means SQ is trading at a premium to the group.

It is also worth noting that SQ currently has a PEG ratio of 2.56. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. SQ's industry had an average PEG ratio of 2.52 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 85, putting it in the top 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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

Published in