Key insights
- InvestingPro's fair value model identified Block as undervalued a year ago, and the stock has since surged 61%. This highlights the potential of valuation models in identifying investment opportunities. While past performance doesn't guarantee future results, the article suggests that similar undervalued stocks identified by the platform could offer potential upside.
Twelve months ago, InvestingPro’s Fair Value models identified Block, Inc. (NYSE:XYZ) as significantly undervalued at $46.53 per share. The fintech company has since delivered a remarkable 60.86% return, vindicating the analysis and demonstrating how Fair Value tools help investors identify better entry points and understand a stock’s intrinsic worth. By combining multiple valuation methodologies including discounted cash flow models and comparable company analyses, Fair Value provides investors with data-driven insights to make more informed investment decisions. Investors seeking similar opportunities today can explore the most undervalued stocks currently flagged by InvestingPro’s models.
Block, Inc., the financial technology company operating Square and Cash App platforms, caught InvestingPro’s attention on May 3, 2025, when the stock traded at $46.53. At that time, the company reported revenue of $23.94 billion and EBITDA of $1.42 billion. The Fair Value analysis calculated an intrinsic value of $68.97 per share, suggesting the stock was trading at a 48% discount to its true worth. This significant margin of safety emerged despite volatile performance in the preceding months, where monthly returns had swung from negative 28% to positive 22%, creating an attractive entry opportunity for value-focused investors.
The investment thesis proved remarkably accurate. From the May 2025 identification price of $46.53, Block shares climbed to $74.85 by May 2026, delivering a 61% return that actually exceeded the initial Fair Value estimate. The stock’s journey wasn’t linear—monthly returns varied throughout the year—but the fundamental undervaluation identified by InvestingPro’s models provided a solid foundation for long-term gains. This type of analytical precision mirrors the success of InvestingPro’s AI-powered ProPicks, which have consistently identified market-beating opportunities.
Several developments validated the Fair Value thesis over the subsequent year. Block announced S&P 500 index inclusion, implemented a $5 billion share buyback program, and received a credit rating upgrade from Moody’s to Ba1. The company forecast 30% annual growth in adjusted income, while EBITDA surged 46% to $2.07 billion. Institutional investors including Cathie Wood’s ARK funds accumulated shares, and the company launched Square AI to enhance its product offerings. These catalysts transformed the undervalued opportunity into tangible shareholder returns.
InvestingPro’s Fair Value methodology aggregates multiple valuation approaches to estimate intrinsic worth. By analyzing future cash flows through discounted cash flow models, comparing valuation multiples against industry peers, incorporating dividend discount models where applicable, and synthesizing analyst consensus targets with market range analysis, the system identifies when stocks trade at significant discounts or premiums to calculated fair value. This comprehensive approach helps investors establish appropriate margins of safety before entering positions.
Block’s 61% surge demonstrates the power of disciplined valuation analysis. InvestingPro subscribers gain access to Fair Value estimates for thousands of stocks, along with real-time alerts when significant mispricings emerge. Learn more about InvestingPro to discover today’s most compelling undervalued opportunities and access the tools that identified Block’s potential a year before its impressive run.