Shopify (SHOP.TO)
Technology · TSX · Canada
Fundamentals
Valuation and ratings
Shopify trades at C$175.76, which is 55% above the C$78.46 our discounted cash flow model puts on the business. On that measure it screens as expensive, which is not the same as saying it will fall.
Our moat model scores it 69 out of 100, which is a moat, but not a deep one. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.
It changes hands at 120.5 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.
About Shopify
Shopify Inc., a commerce technology company, provides tools to start, scale, market, and run a business of various sizes in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The Company offers Shopify platform that enables merchants to manage products and inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics, and reporting and access financing for running their business across all of their sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces. It also provides Shopify Payments, a fully integrated payment processing service that allows merchants to accept and process payment cards online and offline. In addition, the company engages in the sale of themes and apps; shipping labels through Shopify Shipping; point-of-sale hardware; advertising on the Shopify App Store; and Shop Campaigns for buyer acquisitions, as well as registration of domain names. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is based in Ottawa, Canada.
SHOP.TO passes 4 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Common questions
Is Shopify (SHOP.TO) undervalued?
Against our discounted cash flow estimate of C$78.46, SHOP.TO at C$175.76 is 55% above fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.
What is SHOP.TO's P/E ratio?
SHOP.TO trades at 120.5 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.
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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.