SHOPIFY INC. (SHOP) Stock Analysis
SHOPIFY INC. (SHOP) Stock Analysis
Analysis from 10-Q filed 2025-11-04. Data as of Q4 2025.
Overall Grade: F (Concerning)
SHOPIFY INC. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 9.9% | Near cost of capital |
| FCF Margin | 17.4% | Strong cash generation |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Healthy free cash flow margin of 17.4% provides financial flexibility for growth and shareholder returns.
Explore SHOPIFY INC.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: SHOPIFY INC. earns 9.9% ROIC, Top 50% in Technology
SHOPIFY INC.'s trailing-twelve-month ROIC of 9.9% ranks Top 50% in Technology companies (sector median: 5.0%), driven by NOPAT margin of 10.4% combined with asset turnover of 0.8x. Source: 10-Q filed 2025-11-04. Gross margin of 48.1% with operating margin at 12.7% reflects strong pricing power.
| Metric | SHOP | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 9.9% | Adequate | Above sector median of 5.0% |
| Return on Equity (ROE) | 10.2% | Adequate | Moderate equity returns |
| Gross Margin | 48.1% | Good | Strong pricing power |
| Operating Margin | 12.7% | Good | Moderate operational efficiency |
Cash Flow: SHOPIFY INC. generates $2.0B FCF at 17.4% margin, positive NaN/8 quarters
SHOPIFY INC. generated $2.0B in free cash flow (TTM), a 17.4% FCF margin, a margin that ranks Top 50% in Technology. Operating cash flow exceeds net income by 1.7x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-04.
| Metric | SHOP | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 17.4% | Good | Excellent cash conversion |
| Free Cash Flow (TTM) | $2.0B | Good | Positive cash generation |
| OCF/Net Income | 1.7x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: SHOPIFY INC. at 0.0x leverage
SHOPIFY INC.'s debt-to-equity ratio of 0.0x reflects conservative leverage. Source: 10-Q filed 2025-11-04.
| Metric | SHOP | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Valuation: SHOPIFY INC. trades at 171.2x earnings
SHOPIFY INC. trades at a P/E of 171.2x. Free cash flow yield of 1.0% reflects market expectations for growth.
| Metric | SHOP | Rating | Context |
|---|---|---|---|
| P/E Ratio | 171.2x | Warning | Premium valuation |
| EV/Sales | 17.6x | Warning | Growth premium priced in |
| FCF Yield | 1.0% | Warning | Lower cash yield |
Capital Allocation: SHOPIFY INC. returns 0.0% shareholder yield
SHOPIFY INC.'s total shareholder yield is 0.0% (dividends + buybacks). Source: 10-Q filed 2025-11-04.
| Metric | SHOP | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 0.0% | Warning | Dividend + buyback yield combined |
| Total Capital Returned (TTM) | $0 | Adequate | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 9.9% | Top 50% | 2.0x above |
| Free Cash Flow Margin | 17.4% | Top 50% | 2.0x above |
| Gross Margin | 48.1% | Bottom 50% | 0.9x below |
| Operating Margin | 12.7% | Top 50% | 2.7x above |
| Return on Equity (ROE) | 10.2% | Top 50% | 2.0x above |
| P/E Ratio | 171.2x | N/A | - |
Financial Scorecard
| Metric | SHOP | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 9.9% | Adequate | Top 50% of sector (median: 5.0%) |
| Free Cash Flow Margin | 17.4% | Good | Top 50% of sector (median: 8.5%) |
| Gross Margin | 48.1% | Good | Bottom 50% of sector (median: 51.1%) |
| Debt to Equity Ratio | 0.0% | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 171.2x | Warning | High expectations priced in |
| Free Cash Flow Yield | 1.0% | Red flag | Growth-focused valuation |
Frequently Asked Questions
Q: What is SHOPIFY INC.'s Return on Invested Capital (ROIC)?
SHOPIFY INC. (SHOP) has a trailing twelve-month Return on Invested Capital (ROIC) of 9.9%. This compares above the sector median of 5.0%. An ROIC near 8-12% is approximately the cost of capital for most companies.
Q: What is SHOPIFY INC.'s Free Cash Flow Margin?
SHOPIFY INC. (SHOP) has a free cash flow margin of 17.4%, generating $2.0 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is SHOPIFY INC. stock overvalued or undervalued?
SHOPIFY INC. (SHOP) trades at a P/E ratio of 171.2x, which is above the sector median of N/A. The EV/Sales multiple is 17.6x. Free cash flow yield is 1.0%, reflecting growth expectations priced into the stock.
Q: What is SHOPIFY INC.'s revenue and earnings growth?
SHOPIFY INC. (SHOP) grew revenue by 30.1% year-over-year. Earnings per share decreased by 40.0% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: How does SHOPIFY INC. compare to competitors in Technology?
Compared to other companies in Technology, SHOPIFY INC. (SHOP) shows: ROIC of 9.9% is above the sector median of 5.0% (Top 37%). FCF margin of 17.4% exceeds the sector median of 8.5% (Top 30% of sector). Gross margin at 48.1% is 3.1 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with SHOPIFY INC.?
SHOPIFY INC. (SHOP) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-04. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.