Block (NYSE:SQ): Evaluating Valuation After Square’s New Wins With Katz’s and Groucho’s Delis

If you are eyeing Block (NYSE:XYZ) after their latest moves, you are not alone. Block’s subsidiary, Square, just landed new partnerships with legendary Katz's Delicatessen and expanding chain Groucho’s Deli to streamline their operations and power nationwide growth. These wins put Block’s technology in the spotlight, showcasing its ability to modernize beloved brands without sacrificing their unique experiences or operational needs.

The addition of Katz’s and Groucho’s comes amid a period of renewed momentum for Block. Over the past year, the stock is up 10%, despite some ups and downs. This upside has followed an especially mixed performance, including a recent 7% dip over the past month and a strong rebound of 11% across the past three months. For anyone watching the company’s progress, recent deals and events underscore Block’s expanding footprint across both local businesses and larger franchises.

With the share price fluctuating this year, investors now face a classic question: is Block’s recent surge a sign you should be buying now, or is the market already accounting for all future growth?

Most Popular Narrative: 15.5% Undervalued

According to the most widely followed narrative, Block is currently undervalued by more than 15%. Analysts believe the market has not fully priced in the company’s growth prospects, innovative expansion efforts, or the dynamic shifts underway across its fintech ecosystem.

Innovation in business tools and aggressive international and upmarket expansion boost Block's relevance and market share. These factors support long-term revenue and margin growth.

Think Block has already peaked? Think again. There is a calculation behind today’s compelling valuation, but it all hinges on bold forecasts of where revenues, profits, and market reach might head next. Curious about the core financial projections that fuel this upside narrative and what analysts see as the secret to Block’s future dominance? See just how ambitious these assumptions are and why so many experts consider Block one of fintech’s biggest contrarian bets this year.

Result: Fair Value of $87.17 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Block’s future is not without risk, as reliance on volatile crypto revenues and growing lending products could challenge its current growth assumptions.

Find out about the key risks to this Block narrative.

Another View: Discounted Cash Flow Perspective

While analysts see Block as undervalued based on future earnings, the SWS DCF model offers a more conservative outlook. The model suggests the shares may actually be priced above fair value when considering projected cash flows. Could this difference point to hidden risks or untapped upside?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Block for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Block Narrative

If you see Block’s story differently or want to test your own assumptions, you can easily craft a personalized view in minutes: Do it your way.

A great starting point for your Block research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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