Block (XYZ Quick QuoteXYZ - Free Report) shares have gained 46% in the past six months, outperforming the broader Zacks Business Services sector’s appreciation of 17.7% and the Zacks Technology Services industry’s return of 39.8%.

XYZ’s comprehensive commerce ecosystem, which enables sellers to combine software, hardware, and payment services to accept payments from customers, helps it sustain solid momentum across sellers. Its omnichannel offerings, which help sellers create differentiated customer experiences on the back of customer insights by managing orders from POS and eliminating manual aggregation of online and in-person orders, are adding strength to its seller base.

These factors are driving Square’s Gross Payment Volume (GPV), which increased 7.5% and 7.6% year over year, on a reported and constant currency basis, respectively, to $59.9 billion in the third quarter of 2024. Square’s GPV in the U.S. market grew 4.9% year over year, and GPV in international markets grew 20% and 21% year over year on a reported and constant currency basis, respectively.

Block expects Square U.S. and Global GPV growth to improve modestly in the fourth quarter on a sequential basis. Further, it expects Square U.S. and Global GPV year-over-year growth to accelerate in 2025 compared with 2024.

XYZ Stock Beats Sector & Industry

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Block shares are trading above the 200-day moving average, indicating a bullish trend.

XYZ Trades Above 200-day SMA

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Rich Partner Base Aids XYZ Stock’s Prospect

Block’s strong positioning in the digital payments industry on the back of its robust payment and point-of-sale (POS) solutions is a notable driver. Its rich partner base, including Wix, Restaurant365, and Intuit (INTU Quick QuoteINTU - Free Report) , has been a key catalyst.

The company is investing aggressively in expanding its partner base, aiming to scale its distribution network. It recently inked a partnership with Sysco, a leading global foodservice distributor, which will help food and beverage sellers operate more smoothly.

Apart from the foodservice domain, XYZ is leveraging partnerships to expand in the ‘Buy Now, Pay Later’ (BNPL) market through its Afterpay division. Its partnership with several brands, including Curology, Helzberg Diamonds, Journeys, Rawlings Sporting Goods and Zenni Optical, is noteworthy.

Block is expanding its footprint among beauty and wellness providers with new partner integrations, including SalonInteractive, Vish, Submatic, Pomp, SalconScale and Glammatic. It inked a distribution partnership with SalonCentric to bring Square’s hardware and software offerings to more beauty professionals.

XYZ’s Cash App and Lyft (LYFT Quick QuoteLYFT - Free Report) inked a partnership to bring a customer-friendly new payment method to the latter’s customers. Cash App’s partnership with Google Play offers a preferred alternative payment option when checking out on their Android smartphones or tablets.

Expanding BNPL Footprint Aids Block’s Top-Line Growth

Afterpay’s BNPL offering is now available to Alphabet’s (GOOGL Quick QuoteGOOGL - Free Report) Google Play users. The expansion bodes well for the Afterpay division, on which Block estimates that consumers have spent more than $72 billion since its acquisition. Per XYZ, consumer cohorts on the platform for over five years transact more than 31 times per year on average compared with four times for those who joined in the past year.

Block leverages Afterpay to boost consumer engagement. On a trailing 12-month basis, Afterpay has driven 460 million leads to merchants and saw 138 million consumer visits. This is driving advertising revenue growth.

BNPL’s Gross Merchandise Volume jumped 23% year over year to $8.24 billion, exiting the third quarter of 2024. Growth was driven by strength in Block’s Pay-in-Four offering and Single Use Payments, which enables customers to BNPL at both in and out-of-network merchants from within the Afterpay app.

Growing momentum across the Square and CashApp ecosystems, which enables Block to provide peer-to-peer payment and digital commercial transaction facilities, is another positive.

Block leverages AI to deliver an enhanced seller experience. Square Online’s Themes and Square for Retail's AI-generated product descriptions help sellers strengthen customer engagement and automate sales. Square offers generative AI features to sellers, enabling them to automate operations, speed up workflows and save time.

XYZ’s Earnings Estimates Revision Trend Steady

The Zacks Consensus Estimate for 2025 earnings is currently pegged at $4.37 per share, unchanged over the past 30 days. The figure suggests 25.24% growth from 2024’s estimated figure of $3.49.

The consensus mark for 2025 revenues is currently pegged at $26.7 billion, suggesting 10.3% growth over 2024’s estimated figure of $24.21 billion.

XYZ’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing in one and matching in the remaining one, the average surprise being 9.27%.
 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

How Should Investors Play XYZ Shares?

Block shares are cheap, as suggested by the Value Score of B.

While its growing partner base and expanding clientele are noteworthy for investors, XYZ suffers from challenging macroeconomic conditions, persistent inflation, unfavorable forex and sluggish consumer spending trends.

Weakening transaction activities on Cash App and increasing pricing pressure due to rising competition from PayPal in the peer-to-peer payments space do not bode well. XYZ faces stiff competition from Affirm in the booming BNPL market.

Block currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.