Block Earnings: Growth Slows, but the Shift Toward Profitability Remains Intact

We think Block’s fourth-quarter results came in a bit soft, but we still are encouraged by the recent trajectory of the business and the increased focus on improving profitability. Year-over-year gross profit growth in the quarter was 14%, a significant sequential decline, and margins also fell a bit sequentially. However, we still think the company has made substantial progress in 2024 and that the company is now on a firmer footing. We will maintain our $92 fair value estimate for the narrow-moat company. The shares look modestly undervalued to us, although we highlight our Morningstar Uncertainty Rating of Very High.