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

Shopify (SHOP) closed at $1,017.30 in the latest trading session, marking a +0.33% move from the prior day. The stock lagged the S&P 500's daily gain of 0.78%. At the same time, the Dow added 0.68%, and the tech-heavy Nasdaq gained 1.44%.

Prior to today's trading, shares of the cloud-based commerce company had gained 36.71% over the past month. This has outpaced the Computer and Technology sector's gain of 4.97% and the S&P 500's loss of 1.32% in that time.

Investors will be hoping for strength from SHOP as it approaches its next earnings release. On that day, SHOP is projected to report earnings of -$0.02 per share, which would represent a year-over-year decline of 114.29%. Meanwhile, our latest consensus estimate is calling for revenue of $498.22 million, up 37.64% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.51 per share and revenue of $2.16 billion, which would represent changes of +70% and +36.92%, respectively, from the prior year.

Any recent changes to analyst estimates for SHOP should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.18% higher. SHOP currently has a Zacks Rank of #2 (Buy).

Digging into valuation, SHOP currently has a Forward P/E ratio of 1980.13. Its industry sports an average Forward P/E of 34.75, so we one might conclude that SHOP is trading at a premium comparatively.

Investors should also note that SHOP has a PEG ratio of 58.29 right now. 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. Internet - Services stocks are, on average, holding a PEG ratio of 2.81 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 85, which puts 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.

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

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