Square (SQ) vs. Its Peers Critical Survey

Square (NYSE: SQ) is one of 61 publicly-traded companies in the “Application Software” industry, but how does it compare to its peers? We will compare Square to similar companies based on the strength of its analyst recommendations, dividends, profitability, risk, institutional ownership, earnings and valuation.

Valuation & Earnings

This table compares Square and its peers revenue, earnings per share (EPS) and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Square $1.71 billion -$171.59 million -246.47
Square Competitors $916.05 million $45.64 million 438.92

Square has higher revenue, but lower earnings than its peers. Square is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Analyst Ratings

This is a summary of recent recommendations for Square and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Square 0 13 20 0 2.61
Square Competitors 175 1494 2815 86 2.62

Square currently has a consensus price target of $31.85, indicating a potential downside of 23.99%. As a group, “Application Software” companies have a potential upside of 13.79%. Given Square’s peers stronger consensus rating and higher probable upside, analysts clearly believe Square has less favorable growth aspects than its peers.

Insider and Institutional Ownership

53.2% of Square shares are owned by institutional investors. Comparatively, 68.8% of shares of all “Application Software” companies are owned by institutional investors. 32.7% of Square shares are owned by company insiders. Comparatively, 15.0% of shares of all “Application Software” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Square and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Square -3.04% -7.98% -3.18%
Square Competitors -26.09% -106.12% -13.82%

Summary

Square peers beat Square on 6 of the 11 factors compared.

About Square

Square, Inc. (Square) is a commerce ecosystem. The Company enables its sellers start, run and grow their businesses. It combines software with hardware to enable sellers to turn mobile devices and computing devices into payments and point-of-sale solutions. Once a seller downloads the Square Point of Sale mobile application, they can take their first payment. With its offering, a seller can accept payments in person via magnetic stripe (a swipe), Europay, MasterCard, and Visa (EMV) (a dip), or Near Field Communication (NFC) (a tap); or online via Square Invoices, Square Virtual Terminal, or the seller’s Website. Once on its system, sellers gain access to technology and features, such as reporting and analytics, next-day settlements, digital receipts, payment dispute management and chargeback protection, and Payment Card Industry (PCI) compliance. On the consumer (buyer) side, Square Cash offers individuals access to a way to send and receive money.

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