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Square (SQ) to Report Q3 Earnings: What's in the Cards?

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Square, Inc. (SQ - Free Report) is scheduled to report third-quarter 2020 results on Nov 5.

For third-quarter 2020, the Zacks Consensus Estimate for revenues stands at $2.15 billion, reflecting growth of 69.6% from the prior-year quarter.

Further, the Zacks Consensus Estimate for third-quarter earnings is pegged at 14 cents per share, suggesting a decline of 44% year over year.

The company has surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once. It has a trailing four-quarter negative earnings surprise of 70.44%, on average.

Square, Inc. Price and EPS Surprise

Square, Inc. Price and EPS Surprise

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

Factors at Play

Square’s portfolio strength is anticipated to get reflected in third-quarter results.

In the to-be-reported quarter, the company added two new features to Square Payroll, namely, On-Demand Pay for employees and Instant Payments for employers. These features are meant to simplify the payroll process and are expected to have aided growth in the seller base of the company in the quarter.

Further, the introduction of Talking Squarely, the company’s first official podcast which allows sellers to ask questions and talk freely among each other about the new challenges they are facing, is likely to have helped the company draw new sellers to its platform in the quarter under review.

Apart from these, Square’s strong omni-channel offerings, which aid sellers in managing orders from the point of sale and eliminating manual aggregation of online and in-personorders, are expected to have contributed well.

Moreover, strength in Square’s product lines such as Square Invoices, Square Terminal, Instant Deposits, Cash Card, Square Register, Square Reader, Square Stand, Square for Restaurant and API platforms is likely to get reflected in third-quarter revenues.

Additionally, product integrations are expected to have benefited Square’s performance in the quarter to be reported.

Further, growing adoption of Cash App in the bitcoin space is likely to have aided growth in Square’s bitcoin revenues.

The above-mentioned products are likely to get reflected in the company’s third-quarter gross payment volume (GPV).

However, uncertainties related to the pandemic raise concern. Accumulating reserves for transaction and loan losses owing to the expected impact of the coronavirus pandemic are expected to get reflected in third-quarter results.

What Our Model Says

Our proven model does not conclusively predictanearnings 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 -22.93% and a Zacks Rank #1.

Stocks to Consider

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

Advanced Energy Industry, Inc. (AEIS - Free Report) presently has an Earnings ESP of +1.03% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #2 at present.

Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +20.90% and a Zacks Rank #2 at present.

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