Block Inc Q4 Earnings Preview: Eyes On Rule Of 40, Growth, Profitability And More

Benzinga ·  Feb 22 02:48

Fintech Block Inc (NYSE:SQ) is set to report fourth quarter financial results after market close Thursday.

Here's an overview of analyst predictions, their insights before the quarterly report, and crucial points for investors to watch.

Earnings Estimates: Analysts expect Block to report fourth quarter revenue of $5.70 billion, according to data from Benzinga Pro.

The company reported revenue of $4.65 billion in last year's fourth quarter. Block has beaten analysts' estimates for revenue in the last six straight quarters.

Analysts expect Block to report earnings per share of 59 cents, compared to 22 cents in the prior year period. The company has beaten earnings per share estimates in three of the last four quarters and five of the last six quarters.

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What Analysts Are Saying: A focus on profitability could see Block terminate unprofitable businesses, Wedbush analyst Moshe Katri said in an investor note.

The analyst raised the rating from Neutral to Outperform on Block and raised the price target from $70 to $90.

Katri highlights commentary from Block management saying 2024 could be the company's "strongest year of profitability."

JPMorgan analyst Tien-Tsin Huang said Block could set its Rule of 40 targets to come in earlier than expected. The rule of 40 references sustainable profits with revenue growth and profit margins over the 40% level when combined.

The analyst has an Overweight rating and $90 price target.

Here are other recent analyst ratings and price targets on Block:

  • Benchmark: Initiates with a Buy rating, $89 price target
  • BTIG: Upgrades from Neutral to Buy, $85 price target
  • Mizuho: Buy rating, raises price target from $90 to $99

Key Items to Watch: The earnings report comes after peer company PayPal Inc (NASDAQ:PYPL) recently reported quarterly results.

PayPal beat earnings and revenue estimates from analysts but saw shares fall after guidance came in weaker than expected and commentary from the company suggested a transition year.

Analysts and investors will likely be looking for positive commentary on growth and momentum for Block heading into 2024.

The company was reported to have layoffs of 10% of its workforce in January. Block previously said it would cap the number of people at the company at 12,000 until the growth of the business improved.

Another item to watch could be commentary on Block's Cash App unit, which was recently targeted with a report that federal regulators are looking into how the payments are used for terrorists. Commentary from the company in this aspect could be useful for investors and analysts to know if Cash App could be negatively impacted or see additional safeguards put in place.

SQ Price Action: Shares of Block trade at $63.99 versus a 52-week trading range of $38.85 to $83.08. Shares of Block are down 16% in the last year.

Read Next: Jack Dorsey's Block Implements Major Layoffs, Reduces 10% Of Workforce Amid Broader Tech Industry Job Cuts: Report

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