Square (SQ) Stock Sinks As Market Gains: What You Should Know

Square (SQ) closed the most recent trading day at $90.21, moving -0.16% from the previous trading session. This change lagged the S&P 500's 0.53% gain on the day. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq gained 0.75%.

Coming into today, shares of the mobile payments services provider had gained 25.19% in the past month. In that same time, the Computer and Technology sector gained 0.86%, while the S&P 500 gained 2.16%.

SQ will be looking to display strength as it nears its next earnings release, which is expected to be November 14, 2018. In that report, analysts expect SQ to post earnings of $0.11 per share. This would mark year-over-year growth of 57.14%. Meanwhile, our latest consensus estimate is calling for revenue of $860.52 million, up 47.06% from the prior-year quarter.

SQ's full-year Zacks Consensus Estimates are calling for earnings of $0.45 per share and revenue of $3.23 billion. These results would represent year-over-year changes of +66.67% and +45.72%, respectively.

Investors should also note any recent changes to analyst estimates for SQ. 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. 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 remained stagnant. SQ currently has a Zacks Rank of #3 (Hold).

Digging into valuation, SQ currently has a Forward P/E ratio of 199.99. This represents a premium compared to its industry's average Forward P/E of 69.57.

Investors should also note that SQ has a PEG ratio of 8 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Software was holding an average PEG ratio of 4.26 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 87, putting it in the top 34% of all 250+ industries.

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 SQ in the coming trading sessions, be sure to utilize Zacks.com.

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