Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Block, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 25.8% to 8.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 90, DPO 8, DIO 3). At a 9.0% WACC with mid-year discounting, the terminal value (97% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 21.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $89.20 per share, suggesting SQ is undervalued by 55.9% at the current price of $57.22.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,308 | 2,633 | 2,733 | 2,957 | 3,199 | 3,279 |
| (−) Net Interest | 27 | 30 | 32 | 34 | 37 | 38 |
| (+) D&A | 187 | 183 | 214 | 251 | 293 | 300 |
| EBITDA | 2,522 | 2,847 | 2,979 | 3,242 | 3,529 | 3,617 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 284 | 324 | 336 | 364 | 394 | — |
| (−) ΔWC | 7,234 | 1,018 | 313 | 701 | 759 | — |
| Free Cash Flow (FCF) | -4,995 | 1,505 | 2,329 | 2,177 | 2,377 | — |
| Peers' EBITDA Multiple | 21.2x | |||||
| Terminal Value | 76,538 | |||||
| WACC / Discount Rate | 9.02% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -4,784 | 1,322 | 1,877 | 1,609 | 1,611 | 49,704 |
| Enterprise Value | 51,339 | |||||
| Projection Period | 1,635 | 3.2% | ||||
| Terminal Value | 49,704 | 96.8% | ||||
| (−) Current Net Debt | (4,216) | |||||
| Equity Value | 55,555 | |||||
| (÷) Outstanding Shares | 623M | |||||
| Fair Price | $89 | +55.9% | ||||
| WACC \ EV/EBITDA Exit Multiple | 17.2x | 19.2x | 21.2x | 23.2x | 25.2x |
|---|---|---|---|---|---|
| 7.0% | $81 | $89 | $97 | $106 | $114 |
| 8.0% | $77 | $85 | $93 | $101 | $109 |
| 9.0% | $74 | $82 | $89 | $97 | $104 |
| 10.0% | $71 | $78 | $85 | $93 | $100 |
| 11.0% | $68 | $75 | $82 | $89 | $96 |
Current price: $57.22. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.