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For the second quarter, the Zacks Consensus Estimate for revenues is pegged at $6.22 billion, suggesting a rise of 12.3% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for second-quarter earnings is pegged at 76 cents per share, suggesting a jump of 94.9% from the year-ago reported figure. The estimate has been revised upward by 1.4% over the past 30 days.
Image Source: Zacks Investment Research
Block has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 37.1%. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same once, the average surprise being 12.78%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Block this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
The company’s comprehensive commerce ecosystem, which helps attract sellers and retain the existing ones, is likely to have strengthened the seller base in the second quarter.
Block’s robust product portfolio is expected to have driven top-line growth. Integrations across the company’s product lines, which deliver enhanced user experience, are expected to have driven its seller momentum in the quarter under review.
The company’s efforts to integrate artificial Intelligence (AI) to deliver an enhanced seller experience are expected to get reflected in the upcoming results. Its generative AI features for sellers enable them to automate operations, speed up workflows and save time.
Its omnichannel offerings, which help sellers create differentiated customer experiences on the back of customer insights by managing orders from the point of sale and eliminating manual aggregation of online and in-person orders, are anticipated to have been positives.
Growing Cash App engagement is likely to have been a major plus. The solid adoption of products like Cash App Card is expected to have contributed well to the company’s subscription and services revenues.
The Zacks Consensus Estimate for subscription and services revenues is pegged at $1.73 billion, indicating year-over-year growth of 18.6%.
Block is likely to have sustained its momentum in the cryptocurrency space on the back of Cash App, which allows users to buy, sell, send and receive bitcoin.
The consensus mark for bitcoin revenues is pegged at $2.75 billion, indicating year-over-year growth of 15.1%.
Strength across the Square ecosystem on the back of its strong banking products and point-of-sale solutions is likely to have contributed well to Gross Payment Volume (GPV) and transaction revenue growth in the to-be-reported quarter.
The consensus mark for transaction revenues stands at $1.75 billion, suggesting year-over-year growth of 6.8%.
The Zacks Consensus Estimate for GPV is pegged at $63.3 billion, indicating a year-over-year rise of 7.3%.
Block’s expanding presence in the “buy now, pay later” (BNPL) market on the back of Afterpay is anticipated to have been a plus. Strong momentum across its Pay-in-Four and Single Use Payments offerings is expected to have aided its second-quarter performance.
Price Performance & Valuation
Block’s shares have lost 21.5% on a year-to-date basis against the industry, the Zacks Business Services sector and the S&P 500 index’s rise of 16.4%, 6.8% and 14.8%, respectively.
Market uncertainties, high inflation, unfavorable foreign exchange fluctuations and sluggish trends in consumer spending are concerning for the company. The normalization trend in the post-pandemic era is a negative.
Block faces stiff competition from the likes of PayPal (PYPL - Free Report) , Visa (V - Free Report) and Mastercard (MA - Free Report) in the booming BNPL market and the digital payments industry, which is a serious risk.
Visa and Mastercard have gained 0.5% and 3.5%, while PayPal has declined 4% on a year-to-date basis.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value Block offers investors at current levels.
Currently, SQ is trading at a discount, with a forward 12-month P/S of 1.4X compared with the industry’s 6.37X and lower than the median of 1.62X, reflecting a good opportunity for investors.
Image Source: Zacks Investment Research
Investment Thesis
Increasing competitive pressure, and softness in consumer spending trends in food and drink, and retail discretionary verticals are concerning.
Nevertheless, Block’s compelling products and solutions, a comprehensive payment ecosystem, and a strong position in the digital payment industry are expected to benefit its prospects in the near and long turn. The company’s growing footprint in the cryptocurrency and BNPL markets is a major positive.
Block’s solid growth prospects are reflected in its current Growth Style Score of A and Value Style Score of B.
Given the fundamental strength and upswing in the estimates of the key financial metrics, growth-seeking investors should consider the SQ stock as a strong contender in their portfolios ahead of its second-quarter earnings results.
Image: Shutterstock
Is Block (SQ) Stock a Smart Buy Before Q2 Earnings Release?
Block (SQ - Free Report) is scheduled to release its second-quarter 2024 results on Aug 1.
For the second quarter, the Zacks Consensus Estimate for revenues is pegged at $6.22 billion, suggesting a rise of 12.3% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for second-quarter earnings is pegged at 76 cents per share, suggesting a jump of 94.9% from the year-ago reported figure. The estimate has been revised upward by 1.4% over the past 30 days.
Image Source: Zacks Investment Research
Block has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 37.1%. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same once, the average surprise being 12.78%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Block this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Block has an Earnings ESP of +9.93% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping Quarterly Performance
The company’s comprehensive commerce ecosystem, which helps attract sellers and retain the existing ones, is likely to have strengthened the seller base in the second quarter.
Block’s robust product portfolio is expected to have driven top-line growth. Integrations across the company’s product lines, which deliver enhanced user experience, are expected to have driven its seller momentum in the quarter under review.
The company’s efforts to integrate artificial Intelligence (AI) to deliver an enhanced seller experience are expected to get reflected in the upcoming results. Its generative AI features for sellers enable them to automate operations, speed up workflows and save time.
Its omnichannel offerings, which help sellers create differentiated customer experiences on the back of customer insights by managing orders from the point of sale and eliminating manual aggregation of online and in-person orders, are anticipated to have been positives.
Growing Cash App engagement is likely to have been a major plus. The solid adoption of products like Cash App Card is expected to have contributed well to the company’s subscription and services revenues.
The Zacks Consensus Estimate for subscription and services revenues is pegged at $1.73 billion, indicating year-over-year growth of 18.6%.
Block is likely to have sustained its momentum in the cryptocurrency space on the back of Cash App, which allows users to buy, sell, send and receive bitcoin.
The consensus mark for bitcoin revenues is pegged at $2.75 billion, indicating year-over-year growth of 15.1%.
Strength across the Square ecosystem on the back of its strong banking products and point-of-sale solutions is likely to have contributed well to Gross Payment Volume (GPV) and transaction revenue growth in the to-be-reported quarter.
The consensus mark for transaction revenues stands at $1.75 billion, suggesting year-over-year growth of 6.8%.
The Zacks Consensus Estimate for GPV is pegged at $63.3 billion, indicating a year-over-year rise of 7.3%.
Block’s expanding presence in the “buy now, pay later” (BNPL) market on the back of Afterpay is anticipated to have been a plus. Strong momentum across its Pay-in-Four and Single Use Payments offerings is expected to have aided its second-quarter performance.
Price Performance & Valuation
Block’s shares have lost 21.5% on a year-to-date basis against the industry, the Zacks Business Services sector and the S&P 500 index’s rise of 16.4%, 6.8% and 14.8%, respectively.
Market uncertainties, high inflation, unfavorable foreign exchange fluctuations and sluggish trends in consumer spending are concerning for the company. The normalization trend in the post-pandemic era is a negative.
Block faces stiff competition from the likes of PayPal (PYPL - Free Report) , Visa (V - Free Report) and Mastercard (MA - Free Report) in the booming BNPL market and the digital payments industry, which is a serious risk.
Visa and Mastercard have gained 0.5% and 3.5%, while PayPal has declined 4% on a year-to-date basis.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value Block offers investors at current levels.
Currently, SQ is trading at a discount, with a forward 12-month P/S of 1.4X compared with the industry’s 6.37X and lower than the median of 1.62X, reflecting a good opportunity for investors.
Image Source: Zacks Investment Research
Investment Thesis
Increasing competitive pressure, and softness in consumer spending trends in food and drink, and retail discretionary verticals are concerning.
Nevertheless, Block’s compelling products and solutions, a comprehensive payment ecosystem, and a strong position in the digital payment industry are expected to benefit its prospects in the near and long turn. The company’s growing footprint in the cryptocurrency and BNPL markets is a major positive.
Block’s solid growth prospects are reflected in its current Growth Style Score of A and Value Style Score of B.
Given the fundamental strength and upswing in the estimates of the key financial metrics, growth-seeking investors should consider the SQ stock as a strong contender in their portfolios ahead of its second-quarter earnings results.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.