BLOCK INC (NYSE:XYZ), a growth stock which is not overvalued.

BLOCK INC (NYSE:XYZ) was identified as an affordable growth stock by our stock screener. XYZ is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

Evaluating Growth: XYZ

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of XYZ, the assigned 8 reflects its growth potential:

• XYZ shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 37.50%, which is quite impressive.
• Measured over the past years, XYZ shows a very strong growth in Earnings Per Share. The EPS has been growing by 33.32% on average per year.
• XYZ shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 10.06%.
• XYZ shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 38.62% yearly.
• Based on estimates for the next years, XYZ will show a very strong growth in Earnings Per Share. The EPS will grow by 22.41% on average per year.
• Based on estimates for the next years, XYZ will show a quite strong growth in Revenue. The Revenue will grow by 10.16% on average per year.

How do we evaluate the Valuation for XYZ?

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. XYZ was assigned a score of 5 for valuation:

• XYZ is valuated rather cheaply when we compare the Price/Earnings ratio to 28.22, which is the current average of the S&P500 Index.
• With a Price/Forward Earnings ratio of 9.09, the valuation of XYZ can be described as very reasonable.
• When comparing the Price/Forward Earnings ratio of XYZ to the average of the S&P500 Index (20.86), we can say XYZ is valued rather cheaply.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• A more expensive valuation may be justified as XYZ's earnings are expected to grow with 21.20% in the coming years.

Evaluating Health: XYZ

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. XYZ has achieved a 6 out of 10:

• XYZ has a Altman-Z score of 2.66. This is amongst the best in the industry. XYZ outperforms 82.18% of its industry peers.
• The Debt to FCF ratio of XYZ (4.88) is better than 66.34% of its industry peers.
• A Debt/Equity ratio of 0.30 indicates that XYZ is not too dependend on debt financing.
• XYZ has a better Debt to Equity ratio (0.30) than 62.38% of its industry peers.
• A Current Ratio of 2.33 indicates that XYZ has no problem at all paying its short term obligations.
• XYZ's Current ratio of 2.33 is fine compared to the rest of the industry. XYZ outperforms 79.21% of its industry peers.
• A Quick Ratio of 2.33 indicates that XYZ has no problem at all paying its short term obligations.
• XYZ has a better Quick ratio (2.33) than 81.19% of its industry peers.

Profitability Assessment of XYZ

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For XYZ, the assigned 5 is a significant indicator of profitability:

• XYZ has a better Return On Assets (7.88%) than 88.12% of its industry peers.
• XYZ's Return On Equity of 13.62% is fine compared to the rest of the industry. XYZ outperforms 64.36% of its industry peers.
• The Return On Invested Capital of XYZ (4.72%) is better than 65.35% of its industry peers.
• XYZ's Profit Margin has improved in the last couple of years.
• XYZ's Operating Margin has improved in the last couple of years.

More Affordable Growth stocks can be found in our Affordable Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of XYZ

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.