Canadian e-commerce company Shopify (SHOP) has reported mixed third-quarter financial results.
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The Ottawa-based company posted earnings per share (EPS) of $0.34, which met consensus expectations on Wall Street. However, revenue rose an impressive 32% year-over-year to $2.84 billion, beating analyst forecasts for sales of $2.76 billion.
Management said that merchants on its e-commerce platform, with the help of new artificial intelligence (AI) and enterprise tools, are proving resilient amidst rising macroeconomic uncertainty, driving growth at the company. Shopify’s subscriptions revenue rose to $699 million in Q3.
Rich Valuation
Shopify has reported steady growth this year, pushing its share price higher and making it Canada’s most valuable publicly traded company with a market capitalization of $312 billion. But with a forward price-earnings (P/E) multiple of 95, some analysts say the stock is richly valued or overvalued.
Looking to the current year-end holiday quarter, Shopify said it expects revenue to grow in the mid-to-high-twenties percentage rate. Analysts had sales growth of 22.6% penciled in for the company. Gross profits are projected to grow at a low-to-mid-twenties percentage rate, while operating expenses are forecast to be between 30% and 31%, with stock-based compensation of $130 million.
Is SHOP Stock a Buy?
The stock of Shopify has a consensus Moderate Buy rating among 33 Wall Street analysts. That rating is based on 20 Buy and 13 Hold recommendations issued in the last three months. The average SHOP price target of $168.13 implies 0.19% upside from current levels. These ratings could change after the company’s financial results.
