Why NYSE:SHOP Is a Standout High-Growth Stock in a Consolidation Phase.

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether SHOPIFY INC - CLASS A (NYSE:SHOP) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but SHOPIFY INC - CLASS A has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Looking at the Growth

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:SHOP has received a 9 out of 10:

• SHOP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 420.00%, which is quite impressive.
• The Earnings Per Share has been growing by 82.56% on average over the past years. This is a very strong growth
• SHOP shows a strong growth in Revenue. In the last year, the Revenue has grown by 23.18%.
• The Revenue has been growing by 45.76% on average over the past years. This is a very strong growth!
• Based on estimates for the next years, SHOP will show a very strong growth in Earnings Per Share. The EPS will grow by 23.79% on average per year.
• SHOP is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 20.41% yearly.

Analyzing Health Metrics

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:SHOP has earned a 8 out of 10:

• An Altman-Z score of 29.60 indicates that SHOP is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 29.60, SHOP belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
• SHOP has a debt to FCF ratio of 0.71. This is a very positive value and a sign of high solvency as it would only need 0.71 years to pay back of all of its debts.
• SHOP has a Debt to FCF ratio of 0.71. This is amongst the best in the industry. SHOP outperforms 82.93% of its industry peers.
• SHOP has a Debt/Equity ratio of 0.10. This is a healthy value indicating a solid balance between debt and equity.
• SHOP has a Debt to Equity ratio of 0.10. This is in the better half of the industry: SHOP outperforms 70.73% of its industry peers.
• SHOP has a Current Ratio of 7.32. This indicates that SHOP is financially healthy and has no problem in meeting its short term obligations.
• Looking at the Current ratio, with a value of 7.32, SHOP belongs to the top of the industry, outperforming 98.78% of the companies in the same industry.
• A Quick Ratio of 7.32 indicates that SHOP has no problem at all paying its short term obligations.
• SHOP has a Quick ratio of 7.32. This is amongst the best in the industry. SHOP outperforms 100.00% of its industry peers.

Profitability Insights: NYSE:SHOP

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:SHOP was assigned a score of 5 for profitability:

• With an excellent Return On Assets value of 11.23%, SHOP belongs to the best of the industry, outperforming 89.02% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 13.89%, SHOP is in the better half of the industry, outperforming 76.83% of the companies in the same industry.
• SHOP's Return On Invested Capital of 5.60% is fine compared to the rest of the industry. SHOP outperforms 63.41% of its industry peers.
• SHOP has a better Profit Margin (16.41%) than 95.12% of its industry peers.
• SHOP's Operating Margin of 10.59% is fine compared to the rest of the industry. SHOP outperforms 68.29% of its industry peers.
• With a decent Gross Margin value of 51.07%, SHOP is doing good in the industry, outperforming 73.17% of the companies in the same industry.

How does the Setup look for NYSE:SHOP

ChartMill takes into account not only the Technical Rating but also assigns a Setup Rating to each stock. This rating, on a scale of 0 to 10, reflects the degree of consolidation observed based on short-term technical indicators. Currently, NYSE:SHOP exhibits a 7 setup rating, indicating its consolidation status in recent days and weeks.

SHOP has an excellent technical rating and also presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. A pullback is taking place, which may present a nice opportunity for an entry. There is a resistance zone just above the current price starting at 79.47. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 79.09, a Stop Loss order could be placed below this zone.

More Strong Growth stocks can be found in our Strong Growth screener.

Our latest full fundamental report of SHOP contains the most current fundamental analsysis.

Our latest full technical report of SHOP contains the most current technical analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.