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Shopify (SHOP) Exceeds Market Returns: Some Facts to Consider

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In the latest market close, Shopify (SHOP - Free Report) reached $72.45, with a +1.6% movement compared to the previous day. The stock's performance was ahead of the S&P 500's daily gain of 0.54%. Meanwhile, the Dow gained 0.72%, and the Nasdaq, a tech-heavy index, added 0.65%.

Coming into today, shares of the cloud-based commerce company had lost 4.73% in the past month. In that same time, the Computer and Technology sector gained 3.3%, while the S&P 500 gained 4.86%.

The investment community will be closely monitoring the performance of Shopify in its forthcoming earnings report. On that day, Shopify is projected to report earnings of $0.27 per share, which would represent year-over-year growth of 12.5%. At the same time, our most recent consensus estimate is projecting a revenue of $2.11 billion, reflecting a 22.89% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $1.12 per share and revenue of $8.62 billion, which would represent changes of +51.35% and +22.15%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Shopify. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.01% downward. Right now, Shopify possesses a Zacks Rank of #3 (Hold).

Digging into valuation, Shopify currently has a Forward P/E ratio of 63.89. This signifies a premium in comparison to the average Forward P/E of 30.5 for its industry.

Meanwhile, SHOP's PEG ratio is currently 1.63. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. By the end of yesterday's trading, the Internet - Services industry had an average PEG ratio of 2.12.

The Internet - Services industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 92, placing it within the top 37% of over 250 industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.


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