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Square (SQ) Dips More Than Broader Markets: What You Should Know

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Square (SQ) closed the most recent trading day at $128.14, moving -1.43% from the previous trading session. This move lagged the S&P 500's daily loss of 0.97%. At the same time, the Dow lost 0.96%, and the tech-heavy Nasdaq gained 0.23%.

Prior to today's trading, shares of the mobile payments services provider had lost 23.74% over the past month. This has lagged the Computer and Technology sector's loss of 4.93% and the S&P 500's loss of 0.78% in that time.

Square will be looking to display strength as it nears its next earnings release. In that report, analysts expect Square to post earnings of $0.20 per share. This would mark a year-over-year decline of 37.5%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.95 billion, up 25.13% from the year-ago period.

Investors should also note any recent changes to analyst estimates for Square. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 16.1% lower. Square is holding a Zacks Rank of #5 (Strong Sell) right now.

In terms of valuation, Square is currently trading at a Forward P/E ratio of 78.69. Its industry sports an average Forward P/E of 47.03, so we one might conclude that Square is trading at a premium comparatively.

Investors should also note that SQ has a PEG ratio of 2.33 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. SQ's industry had an average PEG ratio of 2.79 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 153, putting it in the bottom 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow SQ in the coming trading sessions, be sure to utilize Zacks.com.


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