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Stoneco (STNE)
NASDAQ:STNE
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Stoneco
(NASDAQ:STNE)
Rating:61Neutral
Price Target:
$15.00
▲( 10.95% Upside)
Positive Factors
Earnings Potential
The cash sweep strategy could significantly benefit the company's earnings before taxes, potentially lifting adjusted EBT by R$13 million for every R$1 billion net movement from demand deposits to time deposits.
Financial Performance
The company's recent increased utilization of its SCFI license allows it to offer 'time deposits' to customers, which is seen as a long-term positive change.
Stock Buyback
The company has completed a substantial portion of its buyback program and has enough excess capital to potentially launch another program.
Negative Factors
Macroeconomic Risks
There is a downside risk of the stock price reaching $10 in the event of a prolonged macroeconomic downturn.
Market Position
STNE lost 6 basis points of market share on credit and debit q/q (and lost 26 bp y/y).
Profitability Pressure
Growth and profitability of merchant acquiring will likely come under significant pressure.
Stoneco (STNE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.63B
Dividend YieldN/A
Average Volume (3M)5.92M
Price to Earnings (P/E)8.7
Beta (1Y)1.36
Revenue Growth-14.03%
EPS Growth-167.03%
CountryUS
Employees7,239
SectorTechnology
Sector Strength75
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.32
Shares Outstanding254,617,000
10 Day Avg. Volume6,802,899
30 Day Avg. Volume5,923,003
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)1.92
Price to Sales (P/S)0.00
P/FCF Ratio-4.27
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$14.00Price Target Upside3.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Stoneco Business Overview & Revenue Model
Company DescriptionStoneCo Ltd. provides financial technology solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and technology and solutions to digital merchants through sales and technical personnel and software vendors, as well as sells solutions to brick-and-mortar and digital merchants through sales team. As of December 31, 2021, the company served approximately 1,766,100 clients primarily small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors. StoneCo Ltd. was founded in 2000 and is headquartered in George Town, the Cayman Islands. StoneCo Ltd. operates as a subsidiary of HR Holdings, LLC.
How the Company Makes MoneyStoneCo makes money primarily through the fees it charges for its payment processing services. This includes transaction fees from merchants who use its POS systems and digital payment solutions. The company also generates revenue through the sale and rental of its POS devices, as well as through subscription fees for its business management software. Additionally, StoneCo offers credit and other financial services to merchants, earning interest income and service fees. Strategic partnerships with financial institutions and technology providers also contribute to StoneCo's revenue by expanding its service offerings and customer base.
Stoneco Key Performance Indicators (KPIs)
Any
Payments: Total TPV
Represents the total transaction payment volume processed, indicating the scale of Stoneco's payment operations and market activity.
Represents the total transaction payment volume processed, indicating the scale of Stoneco's payment operations and market activity.
Data provided by:
Main Street Data
Main Street DataStoneco Financial Statement Overview
Summary
Stoneco demonstrates strong revenue growth potential but struggles with profitability and cash flow stability. The balance sheet shows moderate leverage, but the reduction in equity is concerning. Overall, the company needs to improve its cash flow generation to ensure sustainable operations.Income Statement
Stoneco shows a strong revenue growth trajectory, with a significant increase in total revenue over the years. However, the company has struggled with profitability, as evidenced by negative net income in recent years, impacting net profit margins adversely.65
Positive
Balance Sheet
The company's balance sheet reveals a moderate debt-to-equity ratio, indicating a manageable level of leverage. However, the decrease in stockholders' equity over time presents a concern. The equity ratio remains moderate, reflecting a balanced asset structure.58
Neutral
Cash Flow
Stoneco's cash flow statement indicates volatility, with fluctuating free cash flow figures and periods of negative cash flow. The absence of operating cash flow in the latest period raises concerns about cash generation stability.45
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 12.74B | 11.36B | 9.02B | 4.58B | 3.18B | Gross Profit |
| 9.35B | 8.38B | 6.35B | 2.86B | 2.41B | EBIT |
| 6.11B | 5.25B | 3.98B | 1.09B | 1.47B | EBITDA |
| 988.16M | 3.54B | 1.35B | 739.60K | 1.72B | Net Income Common Stockholders |
| -1.52B | 1.59B | -526.40M | -1.38B | 854.07M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 14.55B | 5.66B | 8.93B | 8.84B | 10.58B | Total Assets |
| 54.81B | 48.69B | 42.25B | 42.06B | 31.75B | Total Debt |
| 12.90B | 5.52B | 5.55B | 8.36B | 6.08B | Net Debt |
| 7.67B | 3.34B | 4.04B | 3.87B | 3.64B | Total Liabilities |
| 42.99B | 34.02B | 29.30B | 28.46B | 16.76B | Stockholders Equity |
| 11.78B | 14.62B | 12.89B | 13.51B | 14.85B |
| Cash Flow | Free Cash Flow | |||
| -4.89B | 437.41M | 960.44M | 2.31B | -398.62M | Operating Cash Flow |
| -3.62B | 1.65B | 1.68B | 3.61B | 56.48M | Investing Cash Flow |
| 1.59B | -845.44M | -1.87B | -2.98B | -5.81B | Financing Cash Flow |
| 5.04B | -148.80M | -2.81B | 1.42B | 7.22B |
Stoneco Technical Analysis
Positive
13.52
Price Trends
12.19
Positive
10.59
Positive
10.88
Positive
Market Momentum
0.31
Positive
56.01
Neutral
29.07
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STNE, the sentiment is Positive. The current price of 13.52 is below the 20-day moving average (MA) of 13.61, above the 50-day MA of 12.19, and above the 200-day MA of 10.88, indicating a neutral trend. The MACD of 0.31 indicates Positive momentum. The RSI at 56.01 is Neutral, neither overbought nor oversold. The STOCH value of 29.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STNE.
Stoneco Risk Analysis
Stoneco disclosed 91 risk factors in its most recent earnings report. Stoneco reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
One of our founder shareholders holds a large amount of voting power over our common shares, and as a result has influence over certain of our activities and corporate decisions. Q4, 2022
2.
Any significant disruption to Linx's cloud hosting network infrastructure could damage its reputation, forcing it to provide credits or refunds, resulting in early termination of customer contracts or loss of customers, and adversely affect its business. Q4, 2022
3.
Links depends on telecommunications, internet and data center providers for its Software as a Service (SaaS), Cloud and on-premise infrastructure and any fluctuation or interruption in the provision of these services may impair the provision of services by Linx and affect its profitability. Q4, 2022
Stoneco Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $3.33B | 25.84 | 26.10% | ― | 33.84% | 0.29% | |
81 Outperform | $2.46B | 19.23 | 24.65% | 0.53% | 17.39% | 100.46% | |
75 Outperform | $2.97B | 6.98 | 14.36% | ― | 2.38% | 9.88% | |
71 Outperform | $2.60B | 23.08 | 15.97% | ― | 14.86% | -0.94% | |
61 Neutral | $3.63B | 8.73 | -8.85% | ― | -14.03% | -167.03% | |
61 Neutral | $11.41B | 10.19 | -7.05% | 2.95% | 7.46% | -10.52% | |
59 Neutral | $2.75B | 26.36 | -41.63% | ― | 13.21% | 109.61% |
* Technology Sector Average
Performance Comparison
STNE
Stoneco
13.52
-0.77
-5.39%
EVTC
Evertec
37.07
2.22
6.37%
PAGS
Pagseguro Digital
8.85
-3.42
-27.87%
PAYO
Payoneer
6.87
0.97
16.44%
DOCN
DigitalOcean Holdings
29.13
-7.23
-19.88%
DLO
DLocal
11.67
2.32
24.81%
Stoneco Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -2.10%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with strong year-over-year growth in key financial metrics, effective capital returns, and growing client engagement. However, some sequential declines in financial performance and anticipated TPV growth deceleration were noted, along with increased financial expenses. Despite these challenges, the company's strategic initiatives and continued focus on profitability suggest a stable future outlook.Q1-2025 Updates
Positive Updates
Strong Year-Over-Year Growth in Key Financial Metrics
Gross profits grew by 19% year-over-year, with EPS growing by 36% year-over-year, surpassing the 18% growth implied in the full-year outlook. Adjusted net income also grew 23% year-over-year.
Share Repurchase and Capital Returns
StoneCo repurchased R$843 million or 15.1 million shares during the quarter. Over the past 12 months, the company has returned R$2.4 billion in share buybacks, highlighting a strong capital return policy.
MSMB Active Client Base and Engagement Growth
The MSMB payments active client base increased by 17% year-over-year, with the heavy user metric reaching 38%, up from 37% in the previous quarter.
Software Segment Achievements
Software segment revenues grew 11% year-over-year, with adjusted EBITDA growing 12% and a reduction in Software CapEx from 71% of EBITDA to 51% this quarter.
Negative Updates
Sequential Decline in Certain Financial Metrics
Adjusted gross profit decreased by 3% quarter-over-quarter, and adjusted net income decreased by 17% quarter-over-quarter due to lower TPV and higher cost of services.
Anticipated TPV Growth Deceleration
The company expects some deceleration in TPV growth as a result of repricing policies and challenging macroeconomic conditions.
Increased Financial Expenses
Financial expenses increased by 23% year-over-year, driven by higher average CDI during the periods, partially offset by the cash sweep strategy.
Company Guidance
During the first quarter of 2025, StoneCo demonstrated strong financial performance, exceeding its annual guidance targets across several key metrics. Gross profits increased by 19% year-over-year, surpassing the 14% annual growth outlined in their guidance, while adjusted basic EPS grew by 36%, significantly above the expected 18% growth for the year. The company also repurchased R$843 million worth of shares, boosting its distribution yield to 12% over the past 12 months. StoneCo's adjusted net income rose by 23% year-over-year, though it experienced a 17% decrease quarter-over-quarter due to higher investments and tax rates. The company's strategic repricing efforts, which were implemented in response to an increase in the yield curve, resulted in a notable improvement in profitability. StoneCo's client base and transaction volumes, particularly in MSMB payments, also showed robust growth, with MSMB active clients growing by 17% year-over-year. Additionally, the company's credit portfolio reached R$1.4 billion, supported by a stable non-performing loan ratio and a coverage ratio of 256%. StoneCo announced a new R$2 billion share repurchase program, underscoring its commitment to shareholder returns while maintaining a disciplined capital allocation strategy.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.