Block, a fintech company, has seen its stock price tumble by over 30% this year amid a broader market sell-off triggered by President Donald Trump’s tariff announcements and rising tensions in the trade war with China. This environment is particularly challenging for fintech firms, as tariffs can stoke inflation and potentially delay the Federal Reserve’s anticipated interest rate cuts. Additionally, recession worries and declining consumer sentiment further darken the outlook. You can read more about the market crash risk right now and the broader market impact of tariffs.
Block, formerly Square, provides a broad range of tech-enabled financial services. Known initially for its digital payments ecosystem and point-of-sale hardware and software, the company has expanded into lending, banking, and other financial services. Block also enables bitcoin trading by purchasing the cryptocurrency from private sellers and offering it to users at a slight markup.
With shares now around $55 following the recent drop, Block stock looks like an attractive buying opportunity in our view. While we recognize existing challenges, we believe the stock’s current valuation is low, indicating that much of the negative sentiment is already priced in. This conclusion comes from comparing Block’s present valuation with its historical financial performance and current health. Evaluating factors like Growth, Profitability, Financial Strength, and Downturn Resilience, we find Block to have moderate operating and financial metrics. For those seeking upside with less volatility than individual stocks, the Trefis High-Quality portfolio is another option—it has outperformed the S&P 500 and delivered returns over 75% since launch.
How Does Block’s Valuation Compare to the S&P 500?
Based on sales and profit multiples, XYZ stock appears slightly undervalued relative to the broader market.
- Block’s price-to-sales (P/S) ratio is 1.5, compared to 3.2 for the S&P 500
- The company’s price-to-operating income (P/EBIT) ratio is 21.1, while the S&P 500 is at 24.3
- Its price-to-earnings (P/E) ratio stands at 12.2, versus 24.3 for the index
How Has Block’s Revenue Grown Recently?
Block’s revenues have shown steady growth in recent years.
- Over the past 3 years, Block’s revenue has grown at an average rate of 11.4%, compared to 6.3% for the S&P 500
- In the last 12 months, revenue increased 10.1% from $22 billion to $24 billion (vs. 5.2% for the S&P 500)
- Quarterly revenues rose 4.5% to $6.0 billion from $5.8 billion a year ago (vs. 5.0% for the S&P 500)
Is Block Profitable?
Block’s profit margins are significantly below the average in the Trefis coverage universe.
- Block’s operating income over the past four quarters was $1.7 billion, yielding a weak operating margin of 7.0% (vs. 13.0% for S&P 500)
- Operating cash flow was also $1.7 billion, equating to a poor OCF-to-sales ratio of 7.1% (vs. 15.7% for S&P 500)
Is Block Financially Sound?
Block’s financial position appears solid.
- • At the end of the last quarter, Block’s debt was $7.9 billion, with a market cap of $30 billion (as of 4/8/2025), giving it a moderate debt-to-equity ratio of 23.6% (vs. 19.0% for S&P 500)
- Cash and equivalents totaled $13 billion out of $37 billion in total assets, resulting in a very strong cash-to-assets ratio of 34.7% (vs. 14.8% for S&P 500)
How Has XYZ Stock Held Up in Past Downturns?
XYZ stock has underperformed the S&P 500 in certain past downturns. With hopes pinned on a soft landing for the U.S. economy, the risk remains if a recession hits. See our dashboard How Low Can Stocks Go During A Market Crash to see how major stocks, including Block, have reacted to past crashes like those documented in market crashes.
Inflation Shock (2022)
- XYZ stock dropped 86.1% from a high of $281.81 on August 5, 2021, to $39.22 on October 30, 2023, while the S&P 500 fell 25.4%
- The stock has not returned to its pre-crisis highs
- The highest level since then was $98.92 on December 4, 2024, and it currently trades near $55
Covid Pandemic (2020)
- XYZ stock dropped 55.6% from $85.70 on February 20, 2020, to $38.09 on March 20, 2020, while the S&P 500 declined 33.9%
- The stock fully recovered to its pre-crisis level by June 2, 2020
Summary: What’s the Outlook for XYZ Stock?
Here’s how Block ranks across our key categories:
• Growth: Strong
• Profitability: Very Weak
• Financial Stability: Very Strong
• Downturn Resilience: Very Weak
• Overall: Neutral
Despite its mixed performance, we believe Block’s current valuation—especially with a price-to-sales ratio of 1.5x, well below its 4-year average of 2.8x—offers a compelling opportunity. While there are concerns such as weak margins and poor resilience in downturns, the current stock price seems to reflect these risks. We see this as a favorable entry point for long-term investors.
Although XYZ stock could trend higher, the Trefis Reinforced Value Portfolio has consistently outperformed its benchmark, a mix of the S&P 500, S&P MidCap, and Russell 2000 indices. Why? Its quarterly rebalancing across large-, mid-, and small-cap stocks allows it to capitalize on bull markets while limiting downside in bear markets, as seen in RV Portfolio performance metrics.
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