Square (SQ) Hits A New 52-Week High On Strong Product Base

Shares of Square, Inc. (NYSE:SQ) rallied to a new 52-week high of $50.50, eventually closing a tad bit lower at $50.42 on Mar 5.

The stock returned 200.8% over a year, outperforming the industry’s rally of 36.2%. We believe that robust product portfolio along with growing clientele will help in sustaining momentum in 2018.

Notably, Square topped the Zacks Consensus Estimate in three of the trailing four quarters while delivering in-line results in one, with an average positive surprise of 48.37%.

Currently, Square carries a Zacks Rank #3 (Hold) and has a market capital of $14.38 billion.

Impressive Q4 Earnings

In fourth-quarter 2017, Square reported adjusted earnings of 8 cents per share which beat the Zacks Consensus Estimate by a penny.

Revenues increased 36.3% on a year-over-year basis to $616 million which surpassed the Zacks Consensus Estimate of $601 million. Adjusted revenues jumped 47% to $283 million.

The upside came on the back of robust product performance and positive retention rate across the company’s seller base.

Strong performances from Invoices, Virtual Terminal and e-commerce API payments offerings are driving transaction revenues.

Additionally, subscription and services segment grew massively over the past few quarters, which were led by strengthening Instant Deposit, Caviar and Square Capital.

Further, Cash App has been performing well since its launch. It now offers bitcoin exchange, which is likely to drive its performance.

Square’s focus on improving omni-channel commerce and expanding financial services offerings are likely to fuel the top line.

Recently, Square acquired certain assets of Entrees On-Trays, which is likely to boost the reach of Square’s Caviar in the region of Dallas and Fort Worth.

Moreover, increasing penetration in existing international markets of Australia, Japan, Canada and the U.K., led by product innovation is likely to drive top-line growth.

Stocks to Consider

Investors interested in the broader technology sector can consider Facebook (NASDAQ:FB) , Paycom Software (NYSE:PAYC) and Nice Systems (NASDAQ:NICE) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Facebook, Paycom Software and Nice Systems are currently pegged at 26.51%, 25.75% and 12.50%, respectively.

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