SHOP - Embedded Expectations Analysis - 2022 05 16
Shopify Inc. (SHOP) currently trades above corporate but below historical averages relative to Uniform earnings, with a 37.3x Uniform P/E (Fwd. V/E').At these levels, markets are pricing in expectations for Uniform ROA to slightly fade to 38%, accompanied by 12% Uniform asset growth.
Meanwhile, analysts expect Uniform ROA to compress to 27% in 2023, accompanied by 47% Uniform asset growth.
If sustained going forward, these levels would imply a stock price closer to $714, representing significant potential equity upside for the firm.
That said, the firm's most recent earnings call suggests management may have concerns about user experience, products, and growth opportunities.
Shopify provides a cloud-based commerce platform designed for small and medium-sized businesses. Merchants use its software to run their business across all of their sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops. Co. provides a platform for merchants to create an omni-channel experience that helps showcase the merchant's brand and grow its business. Co.'s platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting.
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