SNOW Could Deliver 70% Returns And Outperform SHOP

We Forecast Higher Stock Return For Snowflake vs. Its Competitor Shopify
 
Shopify (SHOP) is trading at a cheaper P/S valuation vs Snowflake (SNOW) but it makes sense to pay more for Snowflake for higher return.
 

• In summary, we estimate SNOW to return 70% to stock holders over next 3 years.
• Almost all of this return likely to come from revenue growth, as we expect P/S multiple to remain nearly intact.
• Specifically, expect SNOW revenue to grow on average 19.7% annually over next 3Y; It averaged 40.3% in last 3 years and grew nearly 25.7% last quarter.

P/S = Price to Sales | P/EBIT = Price to earnings before interest and taxes | Current = as of date: 8/5/2025 | LTM = Last 12 months
 
SHOP provides a global commerce platform enabling merchants to display, manage, market, and sell products across multiple sales channels. SNOW provides a cloud-based data platform that consolidates data into a single source to enable meaningful business insights globally.

But do these numbers tell the full story? Read Buy or Sell SNOW Stock to see if Snowflake’s edge holds up under the hood or if Shopify still has cards to play (see Buy or Sell SHOP Stock).

Running growth and valuation scenarios based on historical trends is one way to assess stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
 
3-Year Return Depends On [1] Revenue Growth [2] P/S
 

P/S = Price to Sales | P/EBIT = Price to earnings before interest and taxes | Current = as of date: 8/5/2025 | LTM = Last 12 months
 
How Much Can Revenue Grow In Next 3 Years
 
We forecast annual revenue growth of 13.7% for SHOP and 19.7% for SNOW
 
Past revenue growth metrics that form basis of our expectation
 

SHOP Revenue Comparison | SNOW Revenue Comparison
Recent Quarter Growth = Last quarter (yoy) growth | LTM = Last 12 months
 
Forecast methodology involves:
(a) Different weights to short-term (quarterly) vs long-term (LTM, 3Y Avg) growth (b) Removing exceptional growth periods from consideration
(c) Applying base effect to moderate future growth (d) Applying growth caps and floors based on company size
 
Which P/S Scenarios Make Sense
 
We forecast P/S of 15.7 for SHOP and 17.9 for SNOW based on below plausible scenarios
 
P/S Scenarios & Corresponding 3-Year Returns (in brackets)
 

| SNOW Valuation Ratios Comparison
Current = as of 8/5/2025 | Expansion/Contraction = Based on quarterly trend (+/-) | Average = Historical quarterly average
(a) Exceptional spikes excluded (b) Quarterly trend defined by quarterly average % change (c) Expansion/contraction capped at +30%/-30%
 
Are Current P/S Ratios Justified
 
A higher P/S is justified by higher margin, higher revenue growth, better margin expansion, and lower risk
 

 
No matter how good the numbers, stock investment is never a smooth ride. There is a risk you must factor in. Read SNOW Dip Buyer Analyses and SHOP Dip Buyer Analyses to see how these stocks have fallen and recovered in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.