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

Shopify (SHOP) closed at $31.41 in the latest trading session, marking a +0.54% move from the prior day. This change lagged the S&P 500's 1.06% gain on the day. At the same time, the Dow added 1.05%, and the tech-heavy Nasdaq gained 0.4%.

Prior to today's trading, shares of the cloud-based commerce company had lost 21.68% over the past month. This has lagged the Computer and Technology sector's loss of 8.63% and the S&P 500's loss of 8.3% in that time.

Shopify will be looking to display strength as it nears its next earnings release. In that report, analysts expect Shopify to post earnings of $0.06 per share. This would mark a year-over-year decline of 72.73%. Our most recent consensus estimate is calling for quarterly revenue of $1.35 billion, up 20.81% from the year-ago period.

SHOP's full-year Zacks Consensus Estimates are calling for earnings of $0.10 per share and revenue of $5.79 billion. These results would represent year-over-year changes of -84.38% and +25.56%, respectively.

It is also important to note the recent changes to analyst estimates for Shopify. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate has moved 16.53% lower within the past month. Shopify is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, Shopify currently has a Forward P/E ratio of 308.63. Its industry sports an average Forward P/E of 20.7, so we one might conclude that Shopify is trading at a premium comparatively.

It is also worth noting that SHOP currently has a PEG ratio of 9.58. 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 was holding an average PEG ratio of 1.45 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 210, which puts it in the bottom 17% 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.

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

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