Block: Addition to the S&P 500 Boosts Stock Price

Key Morningstar Metrics for Block

• Fair Value Estimate: $78.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Very High

What We Thought of Block’s Earnings

The market has reacted positively to the news that Block XYZ will be added to the S&P 500.

Why it matters: Inclusion in the S&P 500 typically boosts a company’s shares, with Block’s shares up about 7% on July 21.

• While this is a positive for Block’s common stock, we don’t think inclusion in the S&P 500 changes the company’s fundamental position. Block’s inclusion will be effective as of July 23.
• We think Block has developed a narrow economic moat, but we still see a wide range of possible long-term outcomes for the company, with our Uncertainty Rating at Very High.

The bottom line: We maintain our $78 per share fair value estimate.

• The market reaction to this news has pushed the stock from modestly undervalued to fairly valued, in our view.