Block returned losses of -24.9% last year, with its stock price reaching a high of $93.19 and a low of $51.34. Over the same period, the stock underperformed the S&P 500 index by -28.0%. As of April 2023, the company's 50-day average price was $61.94. Block, Inc., together with its subsidiaries, creates tools that enables sellers to accept card payments and provides reporting and analytics, and next-day settlement. Based in San Francisco, CA, the large-cap Technology company has 12,428 full time employees. Block has not offered a dividend during the last year.
The Company Has a Positive Net Current Asset Value:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $4,714 | $9,498 | $17,661 | $17,532 |
| Gross Margins | 40.1% | 28.8% | 25.0% | 34.2% |
| Operating Margins | 0.6% | -0.2% | 1.3% | -3.3% |
| Net Margins | 7.97% | 2.24% | 0.94% | -3.08% |
| Net Income (MM) | $375 | $213 | $166 | -$541 |
| Net Interest Income | -$21,516 | -$56,943 | -$33,124 | -$36,228 |
| Depreciation & Amort. | -$75,598 | -$84,212 | -$134,757 | -$340,523 |
| Earnings Per Share | $0.81 | $0.44 | $0.33 | -$0.59 |
| EPS Growth | n/a | -45.68% | -25.0% | -278.79% |
| Diluted Shares (MM) | 466 | 482 | 502 | 544 |
| Free Cash Flow (MM) | $403 | $243 | $544 | $5 |
| Capital Expenditures (MM) | -$62 | -$138 | -$304 | -$171 |
| Net Current Assets (MM) | $384 | $574 | -$91 | $1,510 |
| Current Ratio | 1.9 | 1.88 | 1.94 | 1.85 |
| Long Term Debt (MM) | $939 | $2,587 | $4,559 | $4,110 |
| LT Debt to Equity | 0.55 | 0.96 | 1.39 | 0.24 |
Block has growing revenues and increasing reinvestment in the business, healthy debt levels, and generally positive cash flows. However, Block has slimmer gross margins than its peers, consistently negative margins with a negative growth trend, and declining EPS growth. Finally, we note that Block has a decent current ratio.
Block does not have a meaningful trailing P/E ratio since its earnings per share are currently in the red. Based on its EPS guidance of $2.39, the company has a forward P/E ratio of 25.9. In comparison, the average P/E ratio for the Technology sector is 27.16. On the other hand, the market is undervaluing Block in terms of its equity because its P/B ratio is 2.19. In comparison, the sector average is 6.23. In conclusion, Block's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.
Block Has an Average Rating of Buy:
The 37 analysts following Block have set target prices ranging from $60.0 to $110.0 per share, for an average of $86.15 with a buy rating. As of April 2023, the company is trading -28.1% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Block has an average amount of shares sold short because 5.0% of the company's shares are sold short. Institutions own 71.3% of the company's shares, and the insider ownership rate stands at 0.77%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 7% stake in the company is worth $2,255,232,180.
