Block, Inc. (SQ) Valuation Assessment
Current Valuation Multiples (Price: $71.49)
P/E Ratio (Trailing): 18.1x on $4.55 FY 2024 EPS
P/E Ratio (Forward): ~16.0x on $4.48 FY 2025E EPS
Price-to-Sales: 2.17x (vs. $24.12B revenue)
Price-to-Book: 2.46x (vs. $34.41 book value per share)
EV/EBITDA: 30.0x (elevated for mature fintech)
Price-to-Free-Cash-Flow: 33.75x (vs. $2.51 FCF per share)
Price-to-Operating-Cash-Flow: 30.71x
Enterprise Value: $52.28B
FY 2025 Analyst Consensus Forecast
Revenue: $27.29B (up 13.1% from $24.12B in FY 2024)
Net Income: $2.61B (down 10.0% from $2.90B in FY 2024)
EPS: $4.48 (down 1.5% from $4.55 in FY 2024)
EBITDA: $1.04B (down 40.2% from $1.74B in FY 2024)
EBIT: $507M (down 75.1% from $2.04B in FY 2024)
Valuation Red Flags
Margin Compression: Revenue growing 13% but net income declining 10% in FY 2025E
EBITDA Collapse: Projected 40% decline suggests significant profitability headwinds
FCF Premium: Trading at 34x free cash flow vs. 18x earnings (quality concerns)
EV/EBITDA Disconnect: 30x multiple seems rich given projected $1.04B EBITDA
Elevated Multiples: 2.17x P/S and 30x EV/EBITDA are high for slowing growth
Comparative Valuation Context
P/E of 18x: Reasonable for fintech, but only if growth sustains
2.2x P/S: Moderate for software, but high if margins compress
Price-to-Tangible-Book: 5.26x (vs. $13.58 tangible book) - premium valuation
Market Cap to FCF: $43.4B market cap on $1.55B FCF = 28x multiple
Valuation Verdict: FAIRLY VALUED TO SLIGHTLY EXPENSIVE
Block trades at seemingly reasonable multiples on the surface—18x trailing earnings and 16x forward earnings—but the valuation becomes questionable when examining the underlying fundamentals.
The 13% revenue growth forecast for FY 2025 is solid, yet analysts project net income to decline -10% and EBITDA to crater -40%, signaling severe margin compression that undermines the growth narrative.
The 33.75x price-to-free-cash-flow ratio substantially exceeds the 18x P/E multiple, suggesting FY 2024 earnings may have been inflated by one-time items or non-cash gains, raising concerns about earnings quality.
At $71.49, the stock appears fairly valued only if you believe the company can reverse the projected profitability decline, but it looks expensive if the 2025 margin compression materializes as analysts expect—particularly given the 30x EV/EBITDA multiple on a sharply declining EBITDA base.
For value-conscious investors, the risk-reward appears unfavorable unless you have strong conviction that Block can re-accelerate profit growth beyond current consensus expectations.
