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Square (SQ) to Report Q4 Earnings: What's in the Offing?

Square, Inc. SQ is scheduled to report fourth-quarter 2019 results on Feb 26.

For fourth-quarter 2019, the company anticipates net revenues between $1.16 billion and $1.18 billion. The Zacks Consensus Estimate for revenues is pegged at $1.19 billion.

Adjusted earnings are expected in the range of 19-21 cents per share. The Zacks Consensus Estimate for earnings is pegged at 20 cents per share.

The company has beat estimates in the trailing four quarters by 25.36%, on average.

Let’s see how things are shaping up prior to this announcement.

Portfolio Strength

Square’s portfolio strength and product integrations are anticipated to get reflected in the fourth-quarter results.

The company’s omni-channel offerings, which help sellers in creating differentiated customer experience on the back of customer insights by managing orders from the point of sale and eliminating manual aggregation of online and in-person orders, are expected to have strengthened seller base in the to-be-reported quarter.

Additionally, Square’s strong product lines including Square Invoices, Instant Deposits, Cash Card, Square Point of Sale, Square Online Store, Square Reader, Square Photo Studio, Order Manager, Square Payroll and Square Stand are expected to have driven the fourth-quarter performance.

Further, the company’s robust hardware devices like Square Register and Square Terminal are likely to have contributed to unit sales. Moreover, these are expected to have attracted new sellers to Square’s platform.

Moreover, growing adoption of Cash App is likely to have aided in strengthening the company’s seller ecosystem in the quarter under review. Notably, Cash App’s strong business model remains a key catalyst for the company in the bitcoin space.

Apart from all these, Square completed the divestiture of Caviar to DoorDash in fourth-quarter 2019. Notably, Caviar had been underperforming and thereby its sale is likely to have benefited the company in the quarter under review.

However, foreign exchange fluctuations, higher investments and increasing product development expenses are anticipated to get reflected in Square’s fourth-quarter results.

Square, Inc. Price and EPS Surprise


Square, Inc. price-eps-surprise | Square, Inc. Quote


Upswing in GPV

We believe all the above-mentioned factors and the company’s comprehensive commerce ecosystem, which helps it in attracting new sellers and retaining the existing sellers, are likely to have bolstered the seller base during the fourth quarter.

Consequently, Square’s strengthening relationships with sellers are likely to have benefited the company’s gross payment volume (GPV), which is its key growth metric, in the to-be-reported quarter.

Notably, the company defines larger sellers as those which make more than $125,000 of annualized GPV and midmarket sellers as those which make more than $500,000 of annualized revenues.

In the third quarter, GPV came in $28.23 billion beating the Zacks Consensus Estimate of $27.95 billion. Notably, the figure improved 25.5% year over year and 5.4% on a sequential basis. This trend is expected to have continued in the to-be-reported quarter.

The Zacks Consensus Estimate for GPV for fourth quarter is currently projected at $28.5 billion, suggesting growth of 24.5% from the year-ago reported figure.

What Our Model Says

Our proven model conclusively predicts an earnings beat for Square this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Square has an Earnings ESP of +3.59% and a Zacks Rank #3.

Stocks to Consider

Here are some other stocks that you may consider, as our proven model shows that these too have the right combination of elements to post an earnings beat this quarter.

Benefitfocus, Inc BNFT has an Earnings ESP of +4.76% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Guidewire Software, Inc. GWRE has an Earnings ESP of +15.39% and a Zacks Rank #3.

Baidu, Inc. BIDU has an Earnings ESP of +38.81% and a Zacks Rank #3.

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