IB Net Payout Yields Model

Invest like me - only at Covestor.com

Block: Same Square Problems

By -

 

  • Block rallied 26% following strong Q4'21 earnings.
  • The big rally is nearly equal to the returns any investors should expect for the full year.
  • The stock is already expensive trading back at 12x adjusted revenue targets while the BNPL product introduces additional lending risks.
  • Looking for more investing ideas like this one? Get them exclusively at Out Fox The Street. Learn More »

Block (SQ) is finally worth a serious look after the fintech sector has corrected the last few months. The company has a new name, but investors still have to make sure the correct financials are analyzed due to the massive amount of revenues generated by bitcoin. My investment thesis is far more constructive on the stock now, though disappointed in the massive post-earnings jump and the acquisition of Afterpay.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Update - Feb. 28 

These analysts won't quit over paying. BMO Capital wants people to pay 60x '23 earnings for $SQ.

-Block (NYSE:SQ) stock is gaining 1.9% in early trading on Monday after BMO Capital Markets analyst James Fotheringham upgraded Block (SQ) on his more-bullish-than-the-Street expectations for Cash App user growth and product monetization and Afterpay acquisition accretion.

-Fotheringham considers Block's (SQ) investor day on May 18 as a potential positive catalyst. "We look forward to guidance regarding synergies expected from SQ's recently completed acquisition of Afterpay, and the benefits of connecting SQ's merchant-facing Square business to its consumer-facing Cash App business via BNPL (Buy Now, Pay Later)."

-His $159 price target implies a 33% upside to Friday's close of $119.82. 60x target multiple is derived from historical industry-wide relationship between organic revenue growth potential and value with BMO's +32% estimate for Block's (SQ) out-year revenue growth. "SQ's forward P/E recently de-rated by 70%: from 140x a year ago to 45x today."

-The analyst's 2023 EPS estimate of $2.66 is 9% above Street consensus.

Finviz Chart

Comments

Post a Comment

Popular posts from this blog

Occidental: Still Producing Too Much Oil

By -
Image
Though oil continues plunging, the oil giants continue producing more. For Q4, Occidental Petroleum (OXY) had roughly flat production. The worst part is that OXY plans to grow production by 2% to 4% in 2016. The stock has held up somewhat strong, but the inability to turn off the spigot remains troubling. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 
Read more

ChargePoint: Low Quality Beat

By -
Image
  ChargePoint beat FQ2'22 revenue estimates, but the losses are mounting. The company guided up FY22 numbers partly due to acquisitions. The stock still trades at an estimated 21x FY23 number leaving limited upside for the stock and reinforcing why venture funds sold 13.8 million shares. Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our model portfolio.  Learn More » After  solid FQ2'22 earnings ,  ChargePoint Holdings  ( CHPT ) has seen a nice bump in the stock. Now investors have to confront the valuation divide and deal with the past insider sales likely leading to future sales on any stock rallies. My  investment thesis  remains very Bearish on the EV charging station stock on any rallies into the mid-$20s. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details.  Update - Sept. 8 Be cautious when analysts struggle to make the bullish case on expen
Read more

Aurora Cannabis: Deal Or No Deal

By -
Aurora Cannabis was left out of the major deal making in 2018. The cannabis company updated FQ2 guidance to revenues of $50 to $55 million with a continued focus on pure production growth. The stock is down as the market is becoming less impressed with commodity farming operations due to the prime Oregon example. The stock is below key resistance at $5.40 as medical cannabis patient totals failed to impress. As the end of 2018 came and went,   Aurora Cannabis   ( ACB ) was a notable absentee from the deal making in the cannabis market. Just about all of the other major Canadian cannabis players got large investments or signed up powerful partnerships, but the related stocks didn't generally maintain rallies following the deals. Based on the early legalization data in Canada and Oregon, the best option for Aurora Cannabis might actually be selling production capacity while the Canadian market remains hot. Read the full article on Seeking Alpha.  Disclosure: No
Read more