Block (NYSE:SQ) delivers shareholders favorable 13% CAGR over 5 years, surging 8.5% in the last week alone
When we invest, we're generally looking for stocks that outperform the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, the Block, Inc. (NYSE:SQ) share price is up 84% in the last 5 years, clearly besting the market return of around 48% (ignoring dividends).
Since it's been a strong week for Block shareholders, let's have a look at trend of the longer term fundamentals.
Check out our latest analysis for Block
Given that Block didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
For the last half decade, Block can boast revenue growth at a rate of 44% per year. Even measured against other revenue-focussed companies, that's a good result. It's good to see that the stock has 13%, but not entirely surprising given revenue shows strong growth. If you think there could be more growth to come, now might be the time to take a close look at Block. Opportunity lies where the market hasn't fully priced growth in the underlying business.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Block is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
While the broader market lost about 5.9% in the twelve months, Block shareholders did even worse, losing 21%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 13% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Block better, we need to consider many other factors. For example, we've discovered 2 warning signs for Block that you should be aware of before investing here.
Of course Block may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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