The past five years haven't been the easiest environment for Block (XYZ 0.50%) to perform consistently. The company was growing quickly before the pandemic, was supercharged by the health crisis, and has since entered a normalization period of slower gains.
The market has taken notice, as the fintech stock trades 73% below its all-time high (as of Oct. 10). But where will Block be in five years?
Image source: Block.
Don't be surprised if this fintech stock doubles by 2030
Block shares could double in five years and beat the market. It starts with growth; both Square and Cash App increased gross profits by double digits in the second quarter. And management sees large market opportunities for both platforms to keep expanding. It's all about constant product innovation, increasing the number of customers, and getting them to use the offerings more. There is also the potential to tap international markets.
This will push profits much higher, according to Wall Street analysts. The consensus view is for operating income to soar 262% between 2024 and 2027.
The low starting valuation can be a tailwind
Block shares are attractively priced, selling for a forward price-to-earnings ratio of 20.7. The stock is only up 30% in the past three years, though, so investors still don't seem convinced the business has that bright of a future.
But this is a solid company that will likely report more profits five years from now. This should drive shares higher.
