Shopify (SHOP) Laps the Stock Market: Here’s Why

Shopify (SHOP) closed the latest trading day at $108.95, indicating a +1.76% change from the previous session’s end. The stock outperformed the S&P 500, which registered a daily gain of 1.09%. At the same time, the Dow added 1.18%, and the tech-heavy Nasdaq gained 1.03%.

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Prior to today’s trading, shares of the cloud-based commerce company had gained 0.55% over the past month. This has lagged the Computer and Technology sector’s gain of 1.8% and outpaced the S&P 500’s loss of 0.71% in that time.

Analysts and investors alike will be keeping a close eye on the performance of Shopify in its upcoming earnings disclosure. The company is expected to report EPS of $0.43, up 26.47% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.72 billion, up 27.03% from the prior-year quarter.

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For the full year, the Zacks Consensus Estimates project earnings of $1.25 per share and a revenue of $8.77 billion, demonstrating changes of +68.92% and +24.28%, respectively, from the preceding year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Shopify. These revisions help to show the ever-changing nature of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company’s business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To capitalize on this, we’ve crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.54% higher. Shopify is holding a Zacks Rank of #2 (Buy) right now.

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Investors should also note Shopify’s current valuation metrics, including its Forward P/E ratio of 85.43. This represents a premium compared to its industry’s average Forward P/E of 23.65.

One should further note that SHOP currently holds a PEG ratio of 2.01. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company’s expected earnings growth trajectory. The Internet – Services industry had an average PEG ratio of 2.01 as trading concluded yesterday.

The Internet – Services industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 35, this industry ranks in the top 14% of all industries, numbering over 250.

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