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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Block, Inc. (XNYS:SQ) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
SQ
Name:
BLOCK, INC. (XNYS:SQ)
Sector:
188.24M
Industry:
Software�Infrastructure
CEO:
Mr. Jack Dorsey
Total Employees:
8,521
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 127.85% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF BLOCK, INC.(SQ) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SOFTWARE�INFRASTRUCTURE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
66.33
One Month Price Target:
$67.24
Six Month Price Target :
$71.78
Likely Price in One Year's Time:
Ticker:
$77.24
Likely Trading Range Today Under (Normal Volatility)
$65.89
Price Upper limit ($) :
$66.91
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$60.25
This week:
$52.72
This month :
$39.12
Other Primary facts
Market Cap:
38.55B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
590.19M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
26.14%
-28.56%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$94.56
$81.57
$38.10
$51.09
Medium risk (<10%) entry points
Buy Call
Sell Call
$77.34
Buy Put:
Sell Put:
$74.57
$55.28
$58.09
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
SQ
Sharpe Ratio:
2.10%
Comparison:
SQ, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 28.35% higher than the industry
& is -7.93% lower than the market/S&P 500 average
Average Returns/Yield of
SQ
Daily returns:
0.10%
Weekly returns:
0.52%
Monthly returns:
2.07%
Yearly returns:
14.38%
Comparison of returns:
Average annual returns/yield (last 3 years) is 72.93% above industry average
Classification:
SQ, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.83
Statistical test of Returns:
SQ has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
4.52%
Weekly Volatility:
10.10%
Monthly Volatility:
20.20%
Yearly Volatility:
69.98%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.25%
Volatility in last five trading days has been -50.28% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-9.17%
Weekly VaR:
-20.51%
Monthly VaR:
-41.02%
How Much Can the price of
SQ
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-35%
Worst case (decline):
>85%
This translates to price declining to:
$43.06
This translates to price declining to:
$9.95
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
SQ is a 189.54% riskier investment compared to the market/S&P 500 & is 148.04% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 35.57% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
SQ
Beta in relation to market/S&P 500--2.45
Expected beta in 1 year's time:
1.243
Expected beta in 3 year's time:
1.757
Unlevered (debt free) Beta:
1.923
Beta in relation to Nasdaq (XNAS):
1.819
Beta in relation to all global stocks::
1.094
Beta Comparison & Analysis
Beta of competitors/peers::
1.004
Beta is 143.62% higher than peers
Average Industry Beta:
1.112
Beta is 120.11% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
20.18%
Sustainable growth rate is -94.54% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.050
Alpha is 37.11% above industry average alpha yield
Alpha is 316% higher than market/& is unsustainably high
Analysis of Cost of Capital of
SQ
Equity cost of capital:
0.199
Equity cost of capital is 84.97% above industry mean WACC
Unlevered (without debt) cost of capital:
15.65%
Before-tax cost of debt:
0.94%
After-tax cost of debt:
0.75%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.75%
WACC is 119.26% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$28.07
Revenue growth rate per share of (3Y):
2.24
Annual revenue growth rate is 412.78% above the industry average
EPS:
-$0.15
Expected Annual growth rate of EPS (3Y):
-27.89%
Expected future EPS growth rate is -192.57% lower than the Software�Infrastructure industry
Free cash flow (FCF) per share:
$1.84
-
-
Debt per share
$8.40
EBITDA per share
$0.24
Valuation Analysis Today of
SQ
P/E Ratio:
313.78
P/E Ratio of Competitors/Peers:
22.58
P/E ratio is 1289.78% higher than main peers & is 381.00% higher than the industry
-
SQ is -777.85% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
2.36
Price to sales ratio is -78.48% below the industry mean
P/B (Price to book value ratio):
2.24
Price to free cash flow: 36.12
Price to free cash flow ratio is 53.60% higher than the industry
Net income growth rate (3Y):
-482.72%
Net income growth rate is -105.69% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
28.47%
Net debt to equity ratio:
6.66%
Debt to assets ratio:
17.02%
Net debt to assets ratio:
3.98%
Debt-to-asset ratio is -75.59% below industry average
Ability to repay debt:
Interest coverage ratio:
2.95
Interest coverage ratio is -101.40% less than industry average
Looking forward:
Debt growth rate:
80.80%
Annual debt growth is -25% lower than industry average debt growth rate
Debt repayment rate in last quarter: 23.64%
Analysis of Key Statistics
Correlation of price movement with the market:
0.636
Statistical significance of correlation:
SQ has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.48
Stock price is 32.68% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.48
Correlation of price movement with Nasdaq (^IXIC):
-0.061
Covariance of price movement with the market:
-0.16
Kurtosis
4.277
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.046
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
SQ
Gross Profit Margin Ratio:
116%
Operating Profit Margin Ratio:
-0.81%
Operating profit margin is -93.21% lower than the industry
Net Profit Margin Ratio:
116%
Effective Tax Rate:
4.38%
Effective tax rate is -86.01% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
-0.44%
Return on equity (ROE) is -100.41% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
-0.26%
Return on assets (ROA) is -93.03% lower than the industry
Financial Leverage:
1.2x
Current Ratio:
1.97
Current ratio is -15.51% below industry average
Cash Conversion Cycle (days):
24.2
Cash conversion cycle is -78.49% below industry average
The remaining useful life of property plant & equipment is: 14.5 years
Stock based compensation to net income ratio:
-358.05%
In-depth Efficiency Analysis
Revenue generated per employee:
1.9M
Each employee generates 393% more revenue than industry average revenue per employee
EBITDA generated per employee:
16.8K
Each employee generates -74% less EBITDA than industry average revenue per employee
Profit generated per employee:
- 9.0K
Each employee generates -143% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
22.1K
Each employee generates 12% more free cash flow than industry average revenue per employee
Assets/Capital per employee
2.0M
Each employee generates 12% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 58.66%
Growth rate in R&D investment/expenditure is -2362.07% lower than the industry
Competitors/Peer firms of
SQ
FIDELITY NATIONAL INFORMATION SERVICES, INC. (XNYS:FIS)
Abb Ltd (XNYS:ABB)
WIPRO LIMITED (XNYS:WIT)
TE Connectivity Ltd (XNYS:TEL)
VMWARE, INC. (XNYS:VMW)
UBER TECHNOLOGIES, INC. (XNYS:UBER)
AMPHENOL CORPORATION (XNYS:APH)
SUNSTONE METALS LTD (XASX:STM)
DELL TECHNOLOGIES INC. (XNYS:DELL)
Current Analyst Ratings
Strong buy�17%
Buy�54%
Hold�58%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
16.56B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
11.81B
4.75B
1.57B
1.23B
3.00B
1.77B
258.75M
4.83B
-
48.62M
175.61M
143.30M
- 133413.00K
- 76923.00K
- 91558.00K
- 4013.00K
- 76923.00K
Statement of Cash Flow
Date:
Period:
70.06M
Differed Income Tax :
- 7653.00K
Stock Based Compensation :
275.42M
Change in Working Capital :
- 61395.00K
Accounts Receivables:
- 220361.00K
Other Working Capital:
12.13M
Other Non-Cash Items:
160.36M
Net Cash Provided by Operating Activities:
229.42M
Investments in PP&E:
- 41187.00K
Net Acquisitions:
570.70M
Purchases of Investments:
- 226476.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
3.99B
3.99B
7.98B
3.44B
72.34M
370.56M
11.86B
758.16M
12.43B
2.28B
1.64B
-
166.14M
17.27B
-
29.13B
388.95M
196.03M
-
52.97M
5.39B
6.03B
4.96B
450.86M
5.65B
-
11.68B
-
- 232164.00K
218.4M
-
March 31, 2022 at 6:00:00 AM
16.65B
17.41B
29.09B
5.63B
5.15B
1.2B
830.49M
- 2914.00K
1.13B
- 1535176.00K
-
-
-
566.62M
- 968556.00K
- 948.00K
390.53M
7.37B
6.98B
229.42M
- 41187.00K
188.24M
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
SQ
2023
2024
2025
2026
2027
$58.49
$68.11
$79.31
$92.35
$107.53