Shopify’s SHOP The stock has risen over 20% since beating second-quarter revenue and earnings expectations on Tuesday, and investors may be thinking about chasing the rally.
Let’s see if there is still time to buy SHOP as Shopify has big name clients like Target TGT At the same time, it helps a wide range of companies scale their businesses through its multi-channel commerce platform.
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Shopify’s Q2 results
Shopify’s revenue rose 21% to $2.04 billion in the second quarter, up from $1.69 billion in the comparable quarter. It also beat estimates of $2 billion by 2%. On the bottom line, earnings of $0.26 per share were above the $0.14 earnings per share for the second quarter of 2023 and beat estimates of $0.20 per share.
Another highlight was second-quarter free cash flow of $333 million, representing 16% of Shopify’s revenue and more than double the 6% margin in the year-ago quarter.
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Sales forecast and EPS outlook
For the third quarter, Shopify expects year-over-year revenue growth in the low- to mid-20s, which is in line with Zacks’ third-quarter revenue estimates of $2.06 billion, or 20% growth (current quarter below). Overall, Shopify is now forecast to grow total revenue 20% in fiscal 2024 and grow another 19% in fiscal 2025 to $10.19 billion.
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Even better, Shopify’s annual earnings are expected to rise 34% this year to $0.99 per share (compared to earnings per share of $0.74 in 2023). Additionally, earnings per share are expected to rise another 24% to $1.23 in fiscal 2025.
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Conclusion
Shopify’s operational performance is improving tremendously, which continues to fuel the company’s growth. SHOP has a Zacks Rank #2 (Buy). Until then, Shopify stock’s rally could continue after the earnings release, as earnings estimates are likely to be revised upward in the coming weeks.
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