Shopify (SHOP) Stock Sinks as the Market Gains: What You Need to Know

Shopify (SHOP) closed at $643.97 last trading session, marking a -1.92% move from the previous day. This change lagged the S&P 500’s 0.43% gain on the day. Meanwhile, the Dow Jones gained 0.25% and the tech-heavy Nasdaq lost 0.09%.

Going into today, shares of the cloud-based trading company had gained 11.73% over the past month, outpacing the 3.3% gain of the IT and technology sector. technology and the 3.69% gain in the S&P 500 during this period.

Wall Street will be looking for positivity from Shopify as it nears its next earnings report date. The company is expected to post EPS of $0.78, down 61.19% from the prior year quarter. Meanwhile, Zacks consensus estimate for revenue calls for net sales of $1.26 billion, up 26.97% from the prior year period.

Zacks consensus estimates for SHOP’s full year call for earnings of $3.27 per share and revenue of $6.05 billion. These results would represent year-over-year variations of -48.99% and +31.2%, respectively.

Any recent changes in analyst estimates for Shopify should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term trading trends. Therefore, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Based on our research, we believe that these estimate revisions are directly related to the team’s close stock movements. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive track record of outperformance verified by external audits, with #1 stocks generating an average annual return of +25% since 1988 The Zacks Consensus EPS estimate has remained flat over the past month. Shopify currently sports a Zacks rank of #3 (Hold).

Valuation is also important, so investors should note that Shopify has a Forward P/E ratio of 201.04 at this time. This valuation marks a premium compared to the average Forward P/E of its sector of 21.5.

Additionally, it is worth mentioning that SHOP has a PEG ratio of 6.24. The PEG ratio is similar to the widely used P/E ratio, but this measure also takes into account the company’s expected earnings growth rate. SHOP’s industry had an average PEG ratio of 2.6 at yesterday’s close.

The Internet – Services industry is part of the IT and technology sector. This group has a Zacks Industry ranking of 190, which places it in the bottom 25% of all 250+ industries.

The Zacks Industry Rankings are ranked from best to worst in terms of the average Zacks Ranking of individual companies in each of these industries. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to track all of these stock movement metrics, and more, in future trading sessions.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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