Overall, we think Block delivered a solid quarter. While we are somewhat concerned with the relative performance of Block, Cash App growth stayed strong and management is delivering on its promise to improve profitability. We will maintain our $90 fair value estimate for the narrow-moat company. We see shares as somewhat undervalued but would emphasize our Morningstar Uncertainty Rating of Very High.
The ongoing shift toward electronic payments has created, and will continue to create, room for payments companies to see solid growth without stealing share from each other.
Square’s focus on micro and small merchants increases its macroeconomic sensitivity.
|
Metric
|
SQ
|
PYPL
|
GPN
|
|---|---|---|---|
Price/Earnings (Normalized) | 30.98 | 12.30 | 10.50 |
Price/Book Value | 2.26 | 3.34 | 1.28 |
Price/Sales | 1.87 | 2.36 | 2.96 |
Price/Cash Flow | 53.79 | 11.36 | 9.60 |
|
Metric
|
SQ
|
PYPL
|
GPN
|
|---|---|---|---|
Quick Ratio | 1.63 | 1.19 | 0.31 |
Current Ratio | 1.90 | 1.28 | 0.92 |
Interest Coverage | — | 15.47 | 3.02 |
|
Metric
|
SQ
|
PYPL
|
GPN
|
|---|---|---|---|
Return on Assets (Normalized) | 4.31% | 6.86% | 5.57% |
Return on Equity (Normalized) | 7.82% | 26.73% | 12.34% |
Return on Invested Capital (Normalized) | 5.73% | 17.26% | 7.90% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
MSFT
| Microsoft Corp | Hxpbcfzt | Wyfh | $3.0 Tril | |
ORCL
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ADBE
| Adobe Inc | Gbtdsttdt | Dptt | $217.8 Bil | |
PANW
| Palo Alto Networks Inc | Mqpvbnvjv | Jmby | $95.7 Bil | |
SNPS
| Synopsys Inc | Mkxvhvgn | Rstsyz | $81.9 Bil | |
CRWD
| CrowdStrike Holdings Inc Class A | Dqrgxdnc | Kdtnpql | $75.0 Bil | |
PLTR
| Palantir Technologies Inc Ordinary Shares - Class A | Lyqvgtm | Hgyzjn | $52.0 Bil | |
FTNT
| Fortinet Inc | Ssxzwwxk | Sdnk | $44.9 Bil | |
ZS
| Zscaler Inc | Pvfrclgpb | Rjkjfx | $26.5 Bil |
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