Square, Inc. develops and provides point-of-sale software worldwide. It provides Square Register, a point-of-sale system that takes care of digital receipts, inventory, and sales reports, as well as provides analytics and feedback. The company was founded in 2009 and is based in San Francisco, California.
SQ Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for SQ, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Square Inc ranked in the 13th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 88.5%. In terms of the factors that were most noteworthy in this DCF analysis for SQ, they are:
The business' balance sheet suggests that 2% of the company's capital is sourced from debt; this is greater than only 11.58% of the free cash flow producing stocks we're observing.
SQ's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 48.34% of tickers in our DCF set.
As a business, Square Inc experienced a tax rate of about 0% over the past twelve months; relative to its sector (Technology), this tax rate is higher than just 0% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of Square Inc? See MXL, SIMO, AIRG, FARO, and HPE.
Square (SQ) stock took off in 2020. Boosted by the rise of digital payments and the increasing adoption of its peer-to-peer Cash App, investors sent shares up by a massive 245% throughout the year. Square’s success has been boosted by Bitcoin. Apart from the huge investment Square made last year by purchasing BTC worth $500 million (worth considerably more now), part of the Cash App’s appeal is for the easy way users can buy and sell Bitcoin. With the leading cryptocurrency breaching new highs on an almost weekly basis recently, Square looks set to continue reaping the rewards.
One of the major investing themes coming out of 2020 is the soaring price of bitcoin (CCC:BTC). However, the cryptocurrency slid as much as 21% over a two-day period to as low as $32,389. Since the start of the novel coronavirus pandemic, it’s the biggest two-day drop, wiping off nearly $140 billion in total market capitalization. Source: Shutterstock In a nutshell, investors reacted to the stronger dollar and growing political uncertainty. The cryptocurrency is still up roughly 89% on a trailing one-month basis. Nevertheless, the drop did send shivers down the spines of investors. Peaks and valleys will always be part and parcel of investing in bitcoin. But I believe this is just a momentary blip, and normal service will resume soon enough. Covid-19 is surging once again in Asia, and t...