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Square (NYSE:SQ) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Square, Inc. (NYSE:SQ) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.16/share on revenue of $2.08 billion. The consensus earnings per share (EPS) of $0.16/share is based on a poll of 33 analysts and represents a decline in eps of −36.1% over the same quarter last year, when the company reported earnings of $0.25/share.

The revenue forecast of $2.08 billion based on a poll of 27 analysts implies a year-over-year (YoY) growth in revenue of 245.3%. Last year the company reported $602.2 million in revenue for the quarter.

Expected to report EPS contraction of −36.1% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,079.62 $602.22 245.3%
EPS $0.16 $0.25 −36.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Square, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.05 $0.18 449.5% Beat
Q1, 2020 $0.13 -$0.02 −115.6% Missed
Q4, 2019 $0.21 $0.23 9.8% Beat
Q3, 2019 $0.20 $0.25 23.5% Beat
Q2, 2019 $0.16 $0.21 28.7% Beat
Q1, 2019 $0.08 $0.11 40.4% Beat
Q4, 2018 $0.13 $0.14 3.9% Beat
Q3, 2018 $0.11 $0.13 16.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 12.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $136.83 $154 12.5% Increase
May 6, 2020 $66.69 $74.62 11.9% Increase
February 26, 2020 $77.05 $79.31 2.9% Increase
November 6, 2019 $61.06 $64.41 5.5% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.43, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.43 implies a 0.8% chance of earnings manipulation.

Fundamentals And Technical Analysis

Square, Inc. is currently trading at $168.75/share, down −1.3% for the day. The company is trading at approximately 87.2% of its 52-week high of $193.44/share. The company’s stock price is up 9.6% since the last earnings report and down −5.1% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 50.25 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:SQ Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 245.81 and a forward P/E multiple of 263.89.

Square, Inc.’s current share price also implies a price-to-book (P/B) multiple of 38.66. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $168.75
P/E Ratio 245.8x
P/E Ratio (Fwd) 263.9x
PEG Ratio 0.4
Total Debt / Total Capital 3.4%
Levered Free Cash Flow $59.133 million
EV / EBITDA −19,250.4x

Finbox

Square, Inc. is a large-cap stock with a market capitalization of $75.853 billion and a total enterprise value of $75.821 billion. The company operates in the Information Technology sector and the IT Services industry.

Square, Inc. provides, together with its subsidiaries, payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that offers sellers to payment and point-of-sale solutions. It provides hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a portable payments device that replaces keypad terminals, which accepts various payment types, such as tap, dip, and swipe, as well as prints receipts; and managed payments solutions. The company also offers various software products, including Square Point of Sale; Square Virtual Terminal; Square Appointments; Square for Retail; Square for Restaurants; Square Invoices, Square Online Store; Square Loyalty, Marketing, and Gift Cards; and Square Dashboard. In addition, it offers developer platform, which includes application programming interfaces and software development kits. Further, it provides managed payments, instant transfer, Square Card, Square Capital, and payroll. Additionally, it provides Cash App, which enables to send, spend, and store money; and Weebly that offers customers website hosting and domain name registration solutions. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.

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