Shopify (SHOP) Outperforms Broader Market: What You Need to Know

Shopify (SHOP) closed the most recent trading day at $151.30, moving +1.16% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.06%. Meanwhile, the Dow experienced a rise of 0.17%, and the technology-dominated Nasdaq saw an increase of 0.39%.

Prior to today's trading, shares of the cloud-based commerce company had gained 6.67% lagged the Computer and Technology sector's gain of 8.78% and outpaced the S&P 500's gain of 3.94%.

Market participants will be closely following the financial results of Shopify in its upcoming release. The company is expected to report EPS of $0.34, down 5.56% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.74 billion, up 26.88% from the prior-year quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $1.44 per share and revenue of $11.21 billion, indicating changes of +10.77% and +26.25%, respectively, compared to the previous year.

It's also important for investors to be aware of any recent modifications to analyst estimates for Shopify. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable 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 remained steady. Right now, Shopify possesses a Zacks Rank of #3 (Hold).

From a valuation perspective, Shopify is currently exchanging hands at a Forward P/E ratio of 103.87. This expresses a premium compared to the average Forward P/E of 24.61 of its industry.

Also, we should mention that SHOP has a PEG ratio of 5.27. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As the market closed yesterday, the Internet - Services industry was having an average PEG ratio of 1.66.

The Internet - Services industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 84, this industry ranks in the top 35% of all industries, numbering over 250.

The Zacks Industry Rank gauges the strength of our 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.

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

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This article originally published on Zacks Investment Research (zacks.com).

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