Overall SHOP gets a fundamental rating of 6 out of 10. We evaluated SHOP against 88 industry peers in the IT Services industry. While SHOP has a great health rating, its profitability is only average at the moment. SHOP is valued quite expensively, but it does show have an excellent growth rating. This makes SHOP very considerable for growth investing!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

SHOP had positive earnings in the past year.
SHOP had a positive operating cash flow in the past year.
Of the past 5 years SHOP 4 years were profitable.
SHOP had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

Looking at the Return On Assets, with a value of 11.84%, SHOP belongs to the top of the industry, outperforming 89.77% of the companies in the same industry.
SHOP has a better Return On Equity (14.24%) than 76.14% of its industry peers.
With a decent Return On Invested Capital value of 8.30%, SHOP is doing good in the industry, outperforming 71.59% of the companies in the same industry.

		Industry Rank	Sector Rank
ROA	11.84%
ROE	14.24%
ROIC	8.3%

ROA(3y)-5.5%

ROA(5y)1.89%

ROE(3y)-7.69%

ROE(5y)1.62%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

SHOP's Profit Margin of 16.65% is amongst the best of the industry. SHOP outperforms 93.18% of its industry peers.
In the last couple of years the Profit Margin of SHOP has declined.
SHOP's Operating Margin of 12.29% is fine compared to the rest of the industry. SHOP outperforms 75.00% of its industry peers.
In the last couple of years the Operating Margin of SHOP has grown nicely.
SHOP has a Gross Margin of 48.75%. This is in the better half of the industry: SHOP outperforms 69.32% of its industry peers.
SHOP's Gross Margin has declined in the last couple of years.

		Industry Rank	Sector Rank
OM	12.29%
PM (TTM)	16.65%
GM	48.75%

OM growth 3Y23.17%

OM growth 5YN/A

PM growth 3Y-28.88%

PM growth 5YN/A

GM growth 3Y-2.18%

GM growth 5Y-1.69%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so SHOP is destroying value.
Compared to 1 year ago, SHOP has more shares outstanding
Compared to 5 years ago, SHOP has more shares outstanding
SHOP has a better debt/assets ratio than last year.

2.2 Solvency

SHOP has an Altman-Z score of 42.26. This indicates that SHOP is financially healthy and has little risk of bankruptcy at the moment.
SHOP has a Altman-Z score of 42.26. This is amongst the best in the industry. SHOP outperforms 98.86% of its industry peers.
SHOP has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.48
Altman-Z	42.26

ROIC/WACC0.99

WACC8.38%

2.3 Liquidity

SHOP has a Current Ratio of 3.93. This indicates that SHOP is financially healthy and has no problem in meeting its short term obligations.
SHOP's Current ratio of 3.93 is amongst the best of the industry. SHOP outperforms 85.23% of its industry peers.
A Quick Ratio of 3.93 indicates that SHOP has no problem at all paying its short term obligations.
SHOP's Quick ratio of 3.93 is amongst the best of the industry. SHOP outperforms 85.23% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	3.93
Quick Ratio	3.93

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 15.65% over the past year.
SHOP shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 70.21% yearly.
Looking at the last year, SHOP shows a very strong growth in Revenue. The Revenue has grown by 30.25%.
Measured over the past years, SHOP shows a very strong growth in Revenue. The Revenue has been growing by 41.27% on average per year.

EPS 1Y (TTM)15.65%

EPS 3Y23.18%

EPS 5Y70.21%

EPS Q2Q%-2.86%

Revenue 1Y (TTM)30.25%

Revenue growth 3Y24.41%

Revenue growth 5Y41.27%

Sales Q2Q%31.54%

3.2 Future

Based on estimates for the next years, SHOP will show a very strong growth in Earnings Per Share. The EPS will grow by 24.01% on average per year.
SHOP is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 23.85% yearly.

EPS Next Y23.29%

EPS Next 2Y25.37%

EPS Next 3Y26%

EPS Next 5Y24.01%

Revenue Next Year30.47%

Revenue Next 2Y27.16%

Revenue Next 3Y25.37%

Revenue Next 5Y23.85%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 98.67 indicates a quite expensive valuation of SHOP.
SHOP's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of SHOP to the average of the S&P500 Index (28.32), we can say SHOP is valued expensively.
With a Price/Forward Earnings ratio of 69.57, SHOP can be considered very expensive at the moment.
SHOP's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 25.57. SHOP is valued rather expensively when compared to this.

		Industry Rank	Sector Rank
PE	98.67
Fwd PE	69.57

4.2 Price Multiples

60.23% of the companies in the same industry are cheaper than SHOP, based on the Enterprise Value to EBITDA ratio.
SHOP's Price/Free Cash Flow ratio is in line with the industry average.

		Industry Rank	Sector Rank
P/FCF	89.77
EV/EBITDA	119.88

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
SHOP has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as SHOP's earnings are expected to grow with 26.00% in the coming years.