XYZ
Block, Inc.
$68.07
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 40.0% above fair value
You pay
$68.07
Bear
$48.62
Fair
$48.62
Bull
$51.31
Bear
$48.62
-28.6%
3% stage 1 growth, 12% discount
Fair
$48.62
-28.6%
3% stage 1 growth, 12% discount
Bull
$51.31
-24.6%
4% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (3% base case)
Terminal Value % of EV
28%
Implied Market Multiple
24.8x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $82.43 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $48.62 per share.
Warnings
Stock-based employee pay equals 93% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $82.43 (from 35 analysts). Our estimate is 59% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions