Block's (SQ 1.68%) fourth-quarter 2022 earnings were a mixed bag. On the one hand, revenue of $4.65 billion and gross profit of $1.66 billion beat Wall Street estimates. On the other hand, adjusted earnings per share (EPS) of $0.22 were well below the $0.30 that analysts had expected. Nonetheless, investors were pleased with the results, with shares popping 8% following the news. 

But Block remains under pressure. After hitting an all-time high of $281.81 in August 2021, this top fintech stock has lost 72% of its value (as of this writing). Even though Block is down big, I still love it as an investment. Here's why. 

Strong operating segments 

Probably the best reason to love Block is its two budding ecosystems. The Square segment provides various hardware, software, and financial services products to smaller merchants to help them accept card payments, handle payroll and invoices, and manage rewards programs, among other services. Fourth-quarter gross profit for this division was up 22% year over year to $801 million. And Q4 gross payment volume totaled $48.6 billion, a 14% increase year over year. Bringing on a greater number of higher-volume merchants helped. 

Another well-known and widely discussed part of Block is Cash App, a personal finance tool that allows users to send and receive money, set up direct deposit, and buy and sell stocks and Bitcoin (BTC -0.05%). Cash App posted gross profit of $848 million in the most recent quarter, which was up 64% year over year. And it's the top ranked finance app on the Apple App Store, a clear sign of its popularity. In fact, Cash App now counts 51 million monthly transacting users. 

In the current macro environment that is characterized by high inflation, rising interest rates, and the possibility of a recession, to see Block post solid double-digit gross profit growth is a great thing for shareholders. 

Looking ahead, management is very optimistic about Block's trajectory. Executives see a $120 billion total addressable market for Square, and a $70 billion opportunity for Cash App. Introducing new product features, attracting more individual and business users, and penetrating new markets is the strategic playbook here. 

A potential catalyst 

Cash App introduced the ability for its customers to trade Bitcoin in 2020. The business charges a small fee for these transactions. Unsurprisingly, when the price of Bitcoin soars, this can be a moneymaker as users try to ride the momentum and quickly profit. Bitcoin's price rose 129% from the start of 2021 to its peak in November that year. And during that 12-month stretch, Block generated $218 million in gross profit from this service. 

Last year was a different story. Bitcoin's price plunged 44% in 2022. As a result, Block's Bitcoin gross profit dropped 28% year over year, the only part of the business to post a decline. 

Things are starting to look better now, though. Bitcoin is up 42% so far in 2023 (as of March 2). And if the Federal Reserve stops, or maybe even reverses, its course of interest rate hikes, then this could be another bullish sign for Bitcoin. Block, through its Cash App segment, would benefit.

To be clear, I have no idea where the price of Bitcoin is headed. But this no doubt is a potential near-term catalyst that can boost the company's financials in short order. The added benefit is that while these customers might first be attracted to Cash App because of Bitcoin, they could end up using its other features. 

Considering the valuation 

With rising interest rates and general risk-off sentiment among investors, Block's stock has gotten hammered since the end of 2021 and throughout 2022. But with shares down 72% from their peak, the stock is now trading at a price-to-sales ratio of 2.6. This is the lowest valuation shares have been at since 2017.  

This valuation looks attractive given Block's long-term prospects. According to consensus analyst estimates, the business is projected to increase revenue and net income at compound annual growth rates of 17.7% and 40.3%, respectively, between 2022 and 2027. This is certainly a positive outlook. And it could mean that now is a good time to buy the stock given how far down it has fallen.