1 Stat That Makes Shopify Hard to Ignore Right Now
Key Points
Shopify's earnings per share increased a hefty 68% year over year in the second quarter.
The earnings gains were supported by strong revenue growth and efficiency improvements.
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Shopify (NASDAQ: SHOP) stock has seen some volatile swings over the last five years. While the company's share price has been surging recently, it's still only up roughly 22% over the last half decade. Meanwhile, the S&P 500 is up 79%, and the Nasdaq Composite has risen 90%.
But while the e-commerce services specialist's share price gains have lagged behind the broader market over that stretch, the fact that the company's net income per share increased 68% year over year in the second quarter to reach $1.16 is hard to ignore.
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Trading at roughly 67 times next year's expected earnings, Shopify undeniably has a growth-dependent valuation -- but recent momentum for earnings expansion has looked very encouraging. Crucially, the foundations needed to keep earnings growing at a strong clip appear to be in place.
Gross merchandise volume across Shopify's e-commerce platform increased 32% year over year to reach roughly $116 billion in the second quarter. In turn, this helped push revenue for the period up 34% year over year to $3.6 billion.
Demand for the company's e-commerce services continues to look very strong, and Shopify should continue benefiting from new merchants joining its platform and scaling their operations. The company may also be in the early stages of benefiting from cost-cutting efficiencies and engagement tailwinds connected to artificial intelligence that can further support strong earnings growth.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.
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