Discounted Cash Flow Calculation for NYSE:SQ using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
NYSE:SQ DCF 1st Stage: Next 10 year cash flow forecast
The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Square's earnings available for a low price, and how does
this compare to other companies in the same industry?
Square's earnings are expected to grow significantly at over 20% yearly.
Square's revenue is expected to grow by 11.7% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Square's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
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 Officer since September 30, 2015. He serves as an Adviser of Thrive Capital. He has extensive experience with technology companies. He also served as an Interim Chief Executive Officer of Twitter, Inc. from July 2015 to September 30, 2015. He served as Chief Executive Officer and President of Twitter, Inc. from May 2007 to October 2008. He served as an Advisor of Open Places (AKA Trazzler, Inc.). He serves as the Chairman of Square, Inc. He served as the Chairman of the Board of Twitter, Inc. from October 2008 to September 30, 2015. He has been a Director of Twitter, Inc. since May 2007. He served as an Independent Director of The Walt Disney Company from December 20, 2013 to March 8, 2018. He has been a Director of Square, Inc. since July 2009. Mr. Dorsey serves as a Member of Advisory Board of Techonomy Media Inc. Mr. Dorsey attended New York University and Missouri University of Science and Technology.
Jack's compensation has been consistent with company performance over the past year.
Jack's remuneration is lower than average for companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Square management team is about average.
Co-Founder & Director
Square Capital Lead
CFO & Treasurer
Chief Accounting Officer
Head of Investor Relations
General Counsel & Corporate Secretary
Communications & Policy Lead and People Lead
Marketing & Sales Lead
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Square board of directors is about average.
Is Square, Inc. (NYSE:SQ) A Financially Sound Company?
the key to extending previous success is in the health of the company’s financials. … Today we will look at Square’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. … Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis
The US$32b market-cap company announced a latest loss of -US$38.5m on 31 December 2018 for its most recent financial year result. … I’ve put together a brief outline of industry analyst expectations for SQ, its year of breakeven and its implied growth rate … See our latest analysis for Square
What Kind Of Shareholder Appears On The Square, Inc.'s (NYSE:SQ) Shareholder Register?
Generally speaking, as a company grows, institutions will increase their ownership. … We'd expect to see both institutions and retail investors owning a portion of the company. … institutional investors have bought into the company
Intrinsic Calculation For Square, Inc. (NYSE:SQ) Shows Investors Are Overpaying
by taking the foreast future cash flows of the company and discounting them back to today's value. … Discounted Cash Flows (DCF). … If you want to learn more about discounted cash flow, the basis for my calcs can be read in detail in the Simply Wall St analysis model
Is Square Inc's (NYSE:SQ) Balance Sheet Strong Enough To Weather A Storm?
the key to their continued success lies in its financial health. … This article will examine Square’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. … Note that this information is centred entirely on financial health and is a high-level overview, so I encourage you to look further
What Kind Of Shareholder Appears On The Square Inc's (NYSE:SQ) Shareholder Register?
Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. … We'd expect to see institutional investors on the register. … Companies of this size are usually well known to retail investors, too.
Why Square Inc's (NYSE:SQ) Investor Composition Impacts Your Returns
In this article, I will take a quick look at Square Inc’s (NYSE:SQ) recent ownership structure – an unconventional investing subject, but an important one. … When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. … It also impacts the trading environment of company shares, which is more of a concern for short-term investors.
What Investors Should Know About Square Inc's (NYSE:SQ) Financial Strength
the key to their continued success lies in its financial health. … I will provide an overview of Square’s financial liquidity and leverage to give you an idea of Square’s position to take advantage of potential acquisitions or comfortably endure future downturns … Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis
led the NYSE gainers with a relatively large price hike in the past couple of weeks. … As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock … However, could the stock still be trading at a relatively cheap price?
The US$24.75b market-cap posted a loss in its most recent financial year of -US$62.81m and a latest trailing-twelve-month loss of -US$71.71m leading to an even wider gap between loss and breakeven. … Check out our latest analysis for Square … Expectation from IT analysts is SQ is on the verge of breakeven.
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.
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