Why NYSE:SHOP Is a Promising High-Growth Stock in the Midst of Consolidation.

Last update: Jan 8, 2025

In this article we will dive into SHOPIFY INC - CLASS A (NYSE:SHOP) as a possible candidate for growth investing. Investors should always do their own research, but we noticed SHOPIFY INC - CLASS A showing up in our strong growth, ready to breakout screen, which makes it worth to investigate a bit more.

A Closer Look at Growth for NYSE:SHOP

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:SHOP was assigned a score of 9 for growth:

The Earnings Per Share has grown by an impressive 150.00% over the past year.
The Earnings Per Share has been growing by 82.56% on average over the past years. This is a very strong growth
The Revenue has grown by 23.47% in the past year. This is a very strong growth!
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 32.75% on average per year.
SHOP is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 22.03% yearly.

Understanding NYSE:SHOP's Health Score

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:SHOP was assigned a score of 8 for health:

An Altman-Z score of 38.95 indicates that SHOP is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 38.95, 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 0.64. This is a very positive value and a sign of high solvency as it would only need 0.64 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.64, SHOP belongs to the top of the industry, outperforming 83.95% of the companies in the same industry.
A Debt/Equity ratio of 0.09 indicates that SHOP is not too dependend on debt financing.
SHOP's Debt to Equity ratio of 0.09 is fine compared to the rest of the industry. SHOP outperforms 67.90% of its industry peers.
SHOP has a Current Ratio of 7.10. This indicates that SHOP is financially healthy and has no problem in meeting its short term obligations.
With an excellent Current ratio value of 7.10, SHOP belongs to the best of the industry, outperforming 98.77% of the companies in the same industry.
A Quick Ratio of 7.10 indicates that SHOP has no problem at all paying its short term obligations.
SHOP's Quick ratio of 7.10 is amongst the best of the industry. SHOP outperforms 98.77% of its industry peers.

Assessing Profitability for 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:

SHOP has a better Return On Assets (11.23%) than 88.89% of its industry peers.
SHOP has a better Return On Equity (13.68%) than 74.07% of its industry peers.
The Return On Invested Capital of SHOP (5.91%) is better than 62.96% of its industry peers.
The Profit Margin of SHOP (16.85%) is better than 93.83% of its industry peers.
With a decent Operating Margin value of 11.51%, SHOP is doing good in the industry, outperforming 75.31% of the companies in the same industry.
SHOP has a Gross Margin of 50.93%. This is in the better half of the industry: SHOP outperforms 74.07% of its industry peers.

How do we evaluate the setup for NYSE:SHOP?

Alongside the Technical Rating, ChartMill assigns a Setup Rating to evaluate the consolidation level of a stock. This rating, ranging from 0 to 10, is updated daily and considers various short-term technical indicators. The current setup rating for NYSE:SHOP is 7:

Besides having an excellent technical rating, SHOP also presents a decent setup pattern. Prices have been consolidating lately. There is very little resistance above the current price. There is a support zone below the current price at 106.77, a Stop Loss order could be placed below this zone. Another positive sign is the recent Pocket Pivot signal.

Our Strong Growth screener lists more Strong Growth stocks and is updated daily.

For an up to date full fundamental analysis you can check the fundamental report of SHOP

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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.