Block (NYSE:XYZ) stock has seen a significant decline of 25% year-to-date, sharply underperforming the S&P 500’s 7% gain. This downturn is primarily due to a deceleration in gross profit growth across both its Square (merchant) and Cash App (consumer) segments. This slowing growth, coupled with decreased consumer discretionary spending, has led to a cautious outlook from the company, intensifying investor concerns about Block’s ability to maintain momentum in the highly competitive fintech landscape.  Also, see Will The Rally In XRP Price Continue?

Given these challenges and the subsequent stock decline, the crucial question for investors is: What’s next for Block? Is the stock a buy at current levels, or should it be avoided? From a valuation perspective, we find Block stock attractive at around $65. While we acknowledge some existing concerns, its current valuation appears moderate. Separately, see Google Stock To $350?

Our conclusion is derived from a comprehensive analysis comparing Block’s current valuation with its operating performance in recent years, as well as its current and historical financial condition. Our detailed assessment of Block across key parameters – Growth, Profitability, Financial Stability, and Downturn Resilience – indicates that the company possesses a moderate operating performance and financial condition. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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How Does Block’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, XYZ stock is currently valued in line with the broader market.

• Block has a price-to-sales (P/S) ratio of 1.8 vs. a figure of 3.1 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 35.6 compared to 20.9 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 16.3 vs. the benchmark’s 26.9

How Have Block’s Revenues Grown Over Recent Years?

Block’s Revenues have grown marginally over recent years.

• Block has seen its top line grow at an average rate of 13.3% over the last 3 years (vs. increase of 5.5% for S&P 500
• Its revenues have grown 4.6% from $23 Bil to $24 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues fell 3.1% to $5.8 Bil in the most recent quarter from $6.0 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is Block?

Block’s profit margins are much worse than most companies in the Trefis coverage universe.

• Block’s Operating Income over the last four quarters was $1.8 Bil, which represents a poor Operating Margin of 7.4%
• Block’s Operating Cash Flow (OCF) over this period was $1.4 Bil, pointing to a very poor OCF Margin of 5.6% (vs. 14.9% for S&P 500)
• For the last four-quarter period, Block’s Net Income was $2.6 Bil — indicating a moderate Net Income Margin of 10.9% (vs. 11.6% for S&P 500)

Does Block Look Financially Stable?

Block’s balance sheet looks very strong.

• Block’s Debt figure was $6.0 Bil at the end of the most recent quarter, while its market capitalization is $40 Bil (as of 7/13/2025). This implies a strong Debt-to-Equity Ratio of 14.2% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $13 Bil of the $36 Bil in Total Assets for Block.  This yields a very strong Cash-to-Assets Ratio of 35.1%

How Resilient Is XYZ Stock During A Downturn?

XYZ stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on XYZ stock? Our dashboard How Low Can Block Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• XYZ stock fell 86.1% from a high of $281.81 on 5 August 2021 to $39.22 on 30 October 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is 98.92 on 4 December 2024 and currently trades at around $65

COVID-19 Pandemic (2020)

• XYZ stock fell 55.6% from a high of $85.70 on 20 February 2020 to $38.09 on 20 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 2 June 2020

Putting All The Pieces Together: What It Means For XYZ Stock

In summary, Block’s performance across the parameters detailed above are as follows:

• Growth: Neutral
• Profitability: Very Weak
• Financial Stability: Extremely Strong
• Downturn Resilience: Very Weak
• Overall: Neutral

Overall, Block has demonstrated moderate performance across the key parameters we assessed. With many of the company’s near-term challenges likely already factored into its stock price, there’s potential for upside. This is especially true if the U.S. Federal Reserve were to lower interest rates, which would likely boost Block’s business and encourage consumer spending.

Currently, Block’s stock is trading at just 1.8 times its trailing 12-month revenues. This is below its own five-year average price-to-sales (PS) ratio of 2.8 times and considerably lower than the S&P 500’s average of over 3 times. This favorable valuation suggests there’s room for growth.

However, our assessment could be incorrect. Investors might remain hesitant to assign a higher multiple to Block’s stock due to growth concerns. Therefore, investors should carefully weigh the potential risks before deciding to invest in Block. While it does look like there is some upside to XYZ stock, look at the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.