Guru Fundamental Report for SHOP

Validea's guru fundamental report indicates that Shopify (SHOP) receives a 75% rating based on their Small-Cap Growth Investor model, which is based on the Motley Fool's published strategy. While Shopify passes key criteria such as profit margin, relative strength, and cash flow from operations, it fails tests related to insider holdings, the "Fool Ratio," average shares outstanding, sales, and daily dollar volume. The Motley Fool strategy favors small-cap growth stocks with solid fundamentals and strong price performance.

Analysis

Shopify Inc. (SHOP) has received a 75% rating from Validea's Small-Cap Growth Investor model, which is based on the Motley Fool's published strategy. This model targets small-cap growth stocks exhibiting solid fundamentals and strong price performance; notably, Shopify is classified as a large-cap growth stock, making the application of this specific model a point of consideration. A score of 75% is below the 80% threshold that typically indicates strategy interest. Despite this, Shopify passed several key fundamental tests including Profit Margin, Relative Strength, comparison of Sales and EPS Growth to the same period last year, Cash Flow From Operations, Profit Margin Consistency, Cash and Cash Equivalents, Accounts Receivable to Sales, and Long Term Debt/Equity Ratio. However, the company failed criteria related to Insider Holdings, "The Fool Ratio" (P/E to Growth), Average Shares Outstanding, Sales, Daily Dollar Volume, and Income Tax Percentage. R&D as a Percentage of Sales was rated Neutral. The 'FAIL' on 'Sales' and 'Daily Dollar Volume' may be attributable to the model's specific thresholds designed for small-cap companies, which might not directly apply to a large-cap entity like Shopify. The failure on "The Fool Ratio" suggests potential valuation concerns relative to its growth, while low insider holdings and increasing average shares outstanding can be cautionary signals.

Key Decisions for Investors

• Investors should carefully evaluate Shopify's valuation, particularly its P/E to Growth ratio, which failed 'The Fool Ratio' test, potentially indicating an extended valuation despite observed growth characteristics.
• Further due diligence is warranted on the 'FAIL' ratings for insider holdings and average shares outstanding, as these could signal a lack of recent insider buying or ongoing shareholder dilution, respectively.
• While the 75% score reflects several fundamental strengths like robust profit margins and positive cash flow from operations, it falls short of Validea's typical 'interest' threshold (80%), suggesting a need for comprehensive analysis beyond this specific model before committing capital.
• Recognize that certain 'FAIL' criteria from the Small-Cap Growth model, such as 'Sales' and 'Daily Dollar Volume', may be less directly indicative for a large-cap stock like Shopify and should be contextualized with broader market data and peer comparisons.