NYSE:SQ

Stock Analysis Report

Executive Summary

Square, Inc. provides payment and point-of-sale solutions in the United States and internationally.

Rewards

Trading at 51.9% below its fair value

Revenue is forecast to grow 17.04% per year

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of -35.2% per year for the next 3 years

Interest payments are not well covered by earnings

Highly volatile share price over past 3 months

Large one-off items impacting financial results

+ 1 more risk


Snowflake Analysis

Acceptable track record with mediocre balance sheet.


Similar Companies

Share Price & News

How has Square's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SQ's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-0.02%

SQ

-1.5%

US IT

-1.1%

US Market


1 Year Return

-32.0%

SQ

-6.6%

US IT

-13.6%

US Market

Return vs Industry: SQ underperformed the US IT industry which returned -3.6% over the past year.

Return vs Market: SQ underperformed the US Market which returned -10.7% over the past year.


Shareholder returns

SQIndustryMarket
7 Day-0.02%-1.5%-1.1%
30 Day-35.1%-18.9%-17.8%
90 Day-17.9%-19.1%-22.5%
1 Year-32.0%-32.0%-5.7%-6.6%-11.9%-13.6%
3 Year212.7%212.7%56.7%49.9%12.1%4.9%
5 Yearn/a82.1%66.3%30.5%16.3%

Price Volatility Vs. Market

How volatile is Square's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Square undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SQ ($52.38) is trading below our estimate of fair value ($108.83)

Significantly Below Fair Value: SQ is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SQ is poor value based on its PE Ratio (59.3x) compared to the IT industry average (24x).

PE vs Market: SQ is poor value based on its PE Ratio (59.3x) compared to the US market (13.1x).


Price to Earnings Growth Ratio

PEG Ratio: SQ's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: SQ is overvalued based on its PB Ratio (13.2x) compared to the US IT industry average (2.8x).


Next Steps

Future Growth

How is Square forecast to perform in the next 1 to 3 years based on estimates from 28 analysts?

-35.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SQ's earnings are forecast to decline over the next 3 years (-35.2% per year).

Earnings vs Market: SQ's earnings are forecast to decline over the next 3 years (-35.2% per year).

High Growth Earnings: SQ's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SQ's revenue (17% per year) is forecast to grow faster than the US market (7.2% per year).

High Growth Revenue: SQ's revenue (17% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SQ's Return on Equity is forecast to be high in 3 years time (28.4%)


Next Steps

Past Performance

How has Square performed over the past 5 years?

45.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SQ has a large one-off gain of $370.8M impacting its December 31 2019 financial results.

Growing Profit Margin: SQ became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: SQ has become profitable over the past 5 years, growing earnings by 45.7% per year.

Accelerating Growth: SQ has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: SQ has become profitable in the last year, making it difficult to compare its past year earnings growth to the IT industry (13.4%).


Return on Equity

High ROE: SQ's Return on Equity (21.9%) is considered high.


Next Steps

Financial Health

How is Square's financial position?


Financial Position Analysis

Short Term Liabilities: SQ's short term assets ($3.2B) exceed its short term liabilities ($1.7B).

Long Term Liabilities: SQ's short term assets ($3.2B) exceed its long term liabilities ($1.1B).


Debt to Equity History and Analysis

Debt Level: SQ's debt to equity ratio (54.7%) is considered high.

Reducing Debt: SQ's debt to equity ratio has increased from 11% to 54.7% over the past 5 years.


Balance Sheet

Inventory Level: SQ has a low level of unsold assets or inventory.

Debt Coverage by Assets: SQ's debt is covered by short term assets (assets are 3.4x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: SQ is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: SQ is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

What is Square's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

Notable Dividend: Unable to evaluate SQ's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate SQ's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SQ's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SQ's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SQ's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.1yrs

Average management tenure


CEO

Jack Dorsey (42yo)

10.75s

Tenure

US$3

Compensation

Mr. Jack Dorsey Co-founded Square, Inc. in February 2009 and has been its Chief Executive Officer and President since July 2009. Mr. Dorsey Co-founded Twitter, Inc. in 2006 and has been its Chief Executive ...


CEO Compensation Analysis

Compensation vs Market: Jack's total compensation ($USD3.00) is below average for companies of similar size in the US market ($USD11.77M).

Compensation vs Earnings: Jack's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Jack Dorsey
Co-Founder10.75yrsUS$3.0013.62% $3.1b
Sivan Whiteley
General Counsel & Corporate Secretary2.08yrsUS$2.80m0.019% $4.3m
Alyssa Henry
Seller Lead5.5yrsUS$3.87m0.067% $15.3m
Jacqueline Reses
Square Capital Lead4.5yrsUS$3.97m0.049% $11.1m
Amrita Ahuja
CFO & Treasurer1.25yrsno data0.025% $5.7m
Ajmere Dale
Chief Accounting Officer3.67yrsno data0.0037% $832.1k
Jason Lee
Head of Investor Relationsno datano datano data
Aaron Zamost
Communications & Policy Lead and People Leadno datano datano data
Jason Gao
Assistant Secretaryno datano datano data
Nikhil Dixit
Investor Relations Officerno datano datano data

4.1yrs

Average Tenure

45.5yo

Average Age

Experienced Management: SQ's management team is considered experienced (4.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Jack Dorsey
Co-Founder10.75yrsUS$3.0013.62% $3.1b
David Viniar
Lead Independent Directorno dataUS$382.61k0.023% $5.1m
Roelof Botha
Independent Director9.25yrsUS$305.12k0.12% $27.9m
Paul Deighton
Independent Director3.92yrsUS$295.00k0.010% $2.3m
Lawrence Summers
Independent Director8.83yrsUS$300.89k0.056% $12.7m
Mary Meeker
Independent Director8.83yrsUS$305.12k0.090% $20.6m
Anna Patterson
Independent Director2.42yrsUS$299.99k0.0021% $478.7k
James McKelvey
Co-Founder & Independent Director10.75yrsUS$290.04k3.61% $822.5m
Naveen Rao
Independent Director2.58yrsUS$294.99k0.0024% $540.3k
Randall Garutti
Independent Director2.75yrsUS$292.50k0.0029% $654.3k

6.4yrs

Average Tenure

54yo

Average Age

Experienced Board: SQ's board of directors are considered experienced (6.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 4.7%.


Top Shareholders

Company Information

Square, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Square, Inc.
  • Ticker: SQ
  • Exchange: NYSE
  • Founded: 2009
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Market Cap: US$22.798b
  • Shares outstanding: 435.23m
  • Website: https://www.squareup.com

Number of Employees


Location

  • Square, Inc.
  • 1455 Market Street
  • Suite 600
  • San Francisco
  • California
  • 94103
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SQNYSE (New York Stock Exchange)YesClass A Common StockUSUSDNov 2015
SQ3DB (Deutsche Boerse AG)YesClass A Common StockDEEURNov 2015
0L95LSE (London Stock Exchange)YesClass A Common StockGBUSDNov 2015
SQ3BRSE (Berne Stock Exchange)YesClass A Common StockCHCHFNov 2015
SQ *BMV (Bolsa Mexicana de Valores)YesClass A Common StockMXMXNNov 2015
SQUWBAG (Wiener Boerse AG)YesClass A Common StockATEURNov 2015
SQ3ETLX (Eurotlx)YesClass A Common StockITEURNov 2015

Biography

Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that offers sellers to payment and point-of-sale solutions. It provides hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a portable payments device that replaces keypad terminals, which accepts various payment types, such as tap, dip, and swipe, as well as prints receipts; and managed payments solutions. The company also offers various software products, including Square Point of Sale, Square Appointments, Square for Retail, Square for Restaurants, Square Invoices, Virtual Terminal, Weebly, Square Dashboard, Square Loyalty and Marketing, and Square Payroll. In addition, it provides Cash App, which enables individuals to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup, delivery, and catering to their customers; and Square Capital that facilitates loans to sellers based on current payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/01 01:35
End of Day Share Price2020/03/31 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.