Cash App parent Block is back in a cup base buy zone after Friday's jump. The stock initially popped following the Feb. 22 earnings report then pulled back for a while.
In December 2021, Square changed its name to Block as is pointed its focus to blockchain technology, while retaining the ticker SQ. Its Square software and hardware point-of-sale platform is used for credit card payment processing by businesses including retail, restaurant and salons. It also allows for ordering online and appointment setups.
Block operates Cash App, a banking services platform for money transfers from peer to peer. In addition, it offers the transfer of stocks and bitcoin through its brokerage service, Cash App Investing, and has a tax filing capability, too.
Block is ranked No. 1 out of 38 stocks in the credit and payment processing industry group. The group is a ranked 10th out of 197 IBD industry groups.
Cash App Parent Recovers From Blip
Block stock is back in a 5% buy zone reaching to 84.30 from a 80.29 buy point. The stock jumped around 4.6% on Friday, lifting it back into the buy zone. The stock gained nearly 1.1% on Monday. It appeared to get a lift after Jefferies raised its price target to 100 from 90 and maintained its buy rating Monday.
Block reported better-than-expected fourth-quarter sales and higher EBITDA (earnings before interest, taxes, depreciation and amortization) on Feb. 22.
The next day, the stock gapped up 16.1% and broke out in heavy volume, but closed back in the base. The fintech stock bounced around since then but did not trigger any sell signals. Block has a long way to go to get back to its all-time high of 289.23 reached on Aug. 5, 2021.
Strong Earnings Growth Continues
Block's fourth-quarter gross profit of $2.03 billion topped analysts' $1.97 billion estimate.
Quarterly earnings growth has been in the triple-digits for three of the last four quarters, with a 105% rise in Q4. Sales growth has ranged from 24% to 26% in the same time periods.
Block expects current-quarter gross profit of $2 billion to $2.02 billion. It forecast $2.63 billion in adjusted EBITDA for 2024, while analysts are looking for $2.40 billion.
Earnings growth is projected to be strong in the next few quarters, with the current quarter pegged at an 83% increase according to MarketSurge. Analysts expect sales to grow 16% in the current quarter, then three straight quarters of 13% growth.
Analysts recently revised 2024 profit estimate growth up to 79% and 33% in 2025. The Cash App parent holds a 98 IBD Composite Rating and a 97 EPS Rating. Its Accumulation/Distribution Rating of B indicates fairly heavy institutional buy over the last 13 weeks, a positive sign for a stock.
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