Block Q3 Earnings Preview: Solid Margins And Cash Square Up Competition, Cryptocurrency Risk

Jack Dorsey-led Block Inc SQ, formerly Square, will be reporting its third-quarter earnings on Nov. 2, after market hours. Block is a popular name in the FinTech space.

The company’s offerings facilitate mobile payments and provide a variety of services primarily aimed at small and medium-sized businesses.

Here’s what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.

Business & Fundamentals: Block’s key business offerings include a hardware point-of-sale system. It also offers analytics and payment processing software, as well as a free business debit card called Square Debit Card. There’s also the peer-to-peer (P2P) payment app, Cash App.

Cash App also offers Bitcoin ($BTC) trading and holds it on its balance sheet as an alternative to cash.

Block has successfully delivered year-on-year growth to investors in its business and sports a solid net cash balance sheet. Gross profit margins got a big boost during Covid, but receded over the last two reported quarters.

Related: If You Invested $1000 In Block After Michael Saylor Called The Jack Dorsey-Led Company’s $50M Bitcoin Investment ‘Extraordinary’, Here’s How Much You’d Have Today

Increased competition in the payments space and uncertainties with cryptocurrency, more specifically, bitcoin, remain key risks for Block’s business.

Q3 Analysts’ Focus: Expect Block analysts to focus on the company’s gross profit margins and key product milestones. Other payment players — Fiserv Inc FI, Worldline SA WRDLY, and Visa Inc V — are reporting strong payment volumes in Q3. The Street expects SQ to deliver a beat on earnings as well.

Ratings & Consensus Estimates: Wall Street expects Block to report 45 cents in EPS and $5.43 billion in revenue for the third quarter. Estimates for the fiscal period ending Dec. 2023 stand at $1.74 in EPS and $21.55 billion in revenue. Block stock is currently rated a Buy per consensus ratings from Wall Street analysts with a price target of $71.78.

Price Action: Block stock was trading at $43.52 a share at the time of publication on Thursday, closer to the low end of its 52-week range of $38.85 – $89.97. With the stock down 32.8% year-to-date, SQ bulls would see this as an opportunity.

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