NYSE:SHOP: a strong growth stock preparing for the next leg up?.

Growth investors are on the lookout for stocks displaying robust revenue and EPS growth. In this analysis, we'll assess whether SHOPIFY INC - CLASS A (NYSE:SHOP) aligns with growth investing criteria, especially as it consolidates and signals a possible breakout. As always, investors should conduct their own research, but SHOPIFY INC - CLASS A has surfaced on our radar for growth with base formation, warranting further examination.

Assessing Growth Metrics for NYSE:SHOP

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NYSE:SHOP, the assigned 9 reflects its growth potential:

• The Earnings Per Share has grown by an impressive 420.00% over the past year.
• Measured over the past years, SHOP shows a very strong growth in Earnings Per Share. The EPS has been growing by 82.56% on average per year.
• SHOP shows a strong growth in Revenue. In the last year, the Revenue has grown by 23.18%.
• Measured over the past years, SHOP shows a very strong growth in Revenue. The Revenue has been growing by 45.76% on average per year.
• 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.
• Based on estimates for the next years, SHOP will show a very strong growth in Revenue. The Revenue will grow by 20.41% on average per year.

A Closer Look at Health for NYSE:SHOP

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:SHOP scores a 8 out of 10:

• SHOP has an Altman-Z score of 29.86. This indicates that SHOP is financially healthy and has little risk of bankruptcy at the moment.
• With an excellent Altman-Z score value of 29.86, SHOP belongs to the best of the industry, outperforming 98.77% 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.
• With an excellent Debt to FCF ratio value of 0.71, SHOP belongs to the best of the industry, outperforming 82.72% of the companies in the same industry.
• A Debt/Equity ratio of 0.10 indicates that SHOP is not too dependend on debt financing.
• SHOP has a Debt to Equity ratio of 0.10. This is in the better half of the industry: SHOP outperforms 70.37% of its industry peers.
• A Current Ratio of 7.32 indicates that SHOP has no problem at all paying its short term obligations.
• Looking at the Current ratio, with a value of 7.32, SHOP belongs to the top of the industry, outperforming 98.77% 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.
• Looking at the Quick ratio, with a value of 7.32, SHOP belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.

Profitability Analysis for NYSE:SHOP

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:SHOP has earned a 5 out of 10:

• SHOP has a Return On Assets of 11.23%. This is amongst the best in the industry. SHOP outperforms 88.89% of its industry peers.
• The Return On Equity of SHOP (13.89%) is better than 76.54% of its industry peers.
• The Return On Invested Capital of SHOP (5.60%) is better than 62.96% of its industry peers.
• The Profit Margin of SHOP (16.41%) is better than 95.06% of its industry peers.
• The Operating Margin of SHOP (10.59%) is better than 69.14% of its industry peers.
• Looking at the Gross Margin, with a value of 51.07%, SHOP is in the better half of the industry, outperforming 72.84% of the companies in the same industry.

Why is NYSE:SHOP a setup?

In addition to the Technical Rating, ChartMill provides a Setup Rating for each stock. This rating, ranging from 0 to 10, assesses the level of consolidation in the stock based on multiple short-term technical indicators. Currently, NYSE:SHOP has a 8 as its setup rating, indicating its current consolidation status.

Besides having an excellent technical rating, SHOP also presents a decent setup pattern. Prices have been consolidating lately. A pullback is taking place, which may present a nice opportunity for an entry. There is very little resistance above the current price.

Every day, new Strong Growth stocks can be found on ChartMill 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 article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.