Overall SHOP gets a fundamental rating of 6 out of 10. We evaluated SHOP against 88 industry peers in the IT Services industry. SHOP has an excellent financial health rating, but there are some minor concerns on its profitability. SHOP is valued quite expensively, but it does show have an excellent growth rating. These ratings would make SHOP suitable for growth investing!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year SHOP was profitable.
In the past year SHOP had a positive cash flow from operations.
SHOP had positive earnings in 4 of the past 5 years.
SHOP had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

SHOP has a better Return On Assets (11.84%) than 89.77% of its industry peers.
SHOP's Return On Equity of 14.24% is fine compared to the rest of the industry. SHOP outperforms 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

With an excellent Profit Margin value of 16.65%, SHOP belongs to the best of the industry, outperforming 93.18% of the companies in the same industry.
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.
SHOP's Operating Margin has improved in the last couple of years.
The Gross Margin of SHOP (48.75%) is better than 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

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), SHOP is destroying value.
SHOP has more shares outstanding than it did 1 year ago.
SHOP has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, SHOP has an improved debt to assets ratio.

2.2 Solvency

An Altman-Z score of 44.32 indicates that SHOP is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 44.32, SHOP belongs to the best of the industry, outperforming 98.86% of the companies in the same industry.
There is no outstanding debt for SHOP. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.48
Altman-Z	44.32

ROIC/WACC0.99

WACC8.4%

2.3 Liquidity

A Current Ratio of 3.93 indicates that SHOP has no problem at all paying 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.
With an excellent Quick ratio value of 3.93, SHOP belongs to the best of the industry, outperforming 85.23% of the companies in the same industry.

		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

SHOP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.65%, which is quite good.
Measured over the past years, SHOP shows a very strong growth in Earnings Per Share. The EPS has been growing by 70.21% on average per year.
SHOP shows a strong growth in Revenue. In the last year, 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.
Based on estimates for the next years, SHOP will show a very strong growth in Revenue. The Revenue will grow by 23.85% on average per year.

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

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

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4. Valuation

4.1 Price/Earnings Ratio

SHOP is valuated quite expensively with a Price/Earnings ratio of 103.68.
Compared to the rest of the industry, the Price/Earnings ratio of SHOP is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 27.21. SHOP is valued rather expensively when compared to this.
A Price/Forward Earnings ratio of 73.10 indicates a quite expensive valuation of SHOP.
SHOP's Price/Forward Earnings ratio is in line with the industry average.
SHOP is valuated expensively when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	103.68
Fwd PE	73.1

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SHOP indicates a slightly more expensive valuation: SHOP is more expensive than 60.23% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of SHOP is on the same level as its industry peers.

		Industry Rank	Sector Rank
P/FCF	94.33
EV/EBITDA	126.32

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.
SHOP's earnings are expected to grow with 26.00% in the coming years. This may justify a more expensive valuation.