Stoneco (STNE) AI Stock Analysis

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Stoneco

(NASDAQ:STNE)

Rating:64Neutral

Price Target:

$16.00

▲(0.00%Upside)

Stoneco's strong technical momentum and positive earnings call sentiment are offset by significant financial performance challenges and unfavorable valuation metrics. While the company demonstrates growth potential, it must address profitability and cash flow issues to enhance its stock attractiveness.

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 Strategy

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 Valuation

Analyst raises the price objective to US$15, reflecting new EPS estimates and seeing significant upside potential.

Negative Factors

Financial Performance

Stone reported a net loss of R$2,922 million, due to the recognition of a R$3,558 million impairment loss for the software business unit.

Macroeconomic Risks

There is a downside risk of the stock price reaching $10 in the event of a prolonged macroeconomic downturn.

Market Competition

Growth and profitability of merchant acquiring will likely come under significant pressure.

Stoneco (STNE) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.38B

Dividend YieldN/A

Average Volume (3M)6.07M

Price to Earnings (P/E)8.7

Beta (1Y)1.33

Revenue Growth-14.03%

EPS Growth-167.03%

CountryUS

Employees7,239

SectorTechnology

Sector Strength86

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.33

Shares Outstanding254,617,000

10 Day Avg. Volume5,566,024

30 Day Avg. Volume6,067,084

Financial Highlights & Ratios

PEG Ratio0.34

Price to Book (P/B)7.44

Price to Sales (P/S)0.00

P/FCF Ratio-14.57

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.80

Price Target Upside-1.25% Downside

Rating ConsensusStrong Buy

Number of Analyst Covering5

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 generates revenue primarily through transaction fees charged to merchants for payment processing services. The company offers a suite of financial solutions, including point-of-sale hardware, software, and value-added services like receivables financing and working capital loans. StoneCo's revenue streams are diversified through partnerships with other financial institutions and integration with various e-commerce platforms, allowing it to expand its reach and service offerings. Additionally, StoneCo earns income from subscription fees for its software services and interest on financing solutions provided to its merchant clients.

Stoneco Key Performance Indicators (KPIs)

Any

Payments: Total TPV

Payments: Total TPV
Measures the total transaction volume processed, indicating the scale of Stoneco's payment operations and its market penetration.

Chart InsightsStoneCo's Total TPV has shown robust growth, particularly in late 2024, but the latest earnings call indicates a potential deceleration due to strategic repricing and macroeconomic challenges. Despite this, the company has exceeded its annual guidance targets, with strong year-over-year growth in key financial metrics and a significant share repurchase program. The increase in MSMB active clients and transaction volumes underscores StoneCo's expanding market presence, although higher financial expenses and sequential declines in some metrics suggest a cautious outlook.

Data provided by:

Main Street Data

Stoneco Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 15.86%|

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.

Stoneco Financial Statement Overview

Summary

Stoneco shows strong revenue growth but faces challenges with profitability and cash flow management. The balance sheet is stable but needs monitoring for debt and equity trends. Addressing cash flow and profitability issues is crucial for financial health.

Income Statement

Neutral

Stoneco's revenue has shown a positive growth trend over the years, with a notable 16% increase in the TTM. However, the company remains unprofitable with a negative net income, impacting its net profit margin negatively. Gross profit margins are strong, indicating robust core profitability, but the net losses signal challenges in managing expenses or other factors impacting the bottom line.

Balance Sheet

Positive

The balance sheet reflects a relatively stable financial structure with a manageable debt-to-equity ratio. The equity ratio suggests that a significant portion of assets is financed by equity, which is generally positive. However, the declining stockholders' equity and increasing liabilities could pose a risk if not managed properly.

Cash Flow

Neutral

Stoneco's cash flow performance is concerning, with negative free cash flow and operating cash flow in the TTM, indicating cash management challenges. The free cash flow to net income ratio is unfavorable, highlighting the company's struggle to convert profits into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	13.27B	12.74B	11.36B	9.02B	4.58B	3.18B
Gross Profit	9.76B	9.35B	8.38B	6.35B	2.86B	2.41B
EBITDA	1.37B	988.16M	3.54B	1.35B	-437.71M	1.72B
Net Income	-1.37B	-1.52B	1.59B	-519.42M	-1.36B	854.07M
Balance Sheet
Total Assets	53.93B	54.81B	48.69B	42.25B	42.06B	31.75B
Cash, Cash Equivalents and Short-Term Investments	7.94B	14.55B	5.66B	8.93B	8.84B	10.58B
Total Debt	13.44B	12.90B	5.52B	5.55B	8.36B	6.08B
Total Liabilities	42.47B	42.99B	34.02B	29.30B	28.46B	16.76B
Stockholders Equity	11.42B	11.78B	14.62B	12.89B	13.51B	14.85B
Cash Flow
Free Cash Flow	-1.78B	-4.89B	437.41M	960.44M	2.31B	-398.62M
Operating Cash Flow	-523.99M	-3.62B	1.65B	1.68B	3.61B	56.48M
Investing Cash Flow	-1.03B	1.59B	-845.44M	-1.87B	-2.98B	-5.81B
Financing Cash Flow	2.19B	5.04B	-148.80M	-2.81B	1.42B	7.22B

Stoneco Technical Analysis

Technical Analysis Sentiment

Positive

Last Price16.00

Price Trends

50DMA

14.03

Positive

100DMA

12.18

Positive

200DMA

11.07

Positive

Market Momentum

MACD

0.63

Negative

RSI

64.29

Neutral

STOCH

93.35

Negative

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 16 is above the 20-day moving average (MA) of 14.72, above the 50-day MA of 14.03, and above the 200-day MA of 11.07, indicating a bullish trend. The MACD of 0.63 indicates Negative momentum. The RSI at 64.29 is Neutral, neither overbought nor oversold. The STOCH value of 93.35 is Negative, 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

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

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

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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EVTC	81 Outperform	$2.39B	18.70	24.65%	0.54%	17.39%	100.46%
DLO	81 Outperform	$3.19B	24.71	26.10%	―	―	―
PAYO	75 Outperform	$2.51B	23.18	15.97%	―	14.86%	-0.94%
PAGS	75 Outperform	$3.10B	7.66	14.36%	1.49%	2.38%	9.88%
DOCN	66 Neutral	$2.55B	26.01	-41.63%	―	13.21%	109.61%
STNE	64 Neutral	$4.38B	8.73	-8.85%	―	-14.03%	-167.03%
Sector *	63 Neutral	$33.61B	6.06	-11.53%	1.82%	5.53%	-18.79%

* Technology Sector Average

Performance Comparison

STNE

Stoneco

16.00

3.66

29.66%

EVTC

Evertec

37.30

4.62

14.14%

PAGS

Pagseguro Digital

9.42

-2.38

-20.17%

PAYO

Payoneer

6.93

1.47

26.92%

DOCN

DigitalOcean Holdings

28.40

-6.32

-18.20%

DLO

DLocal

11.16

3.48

45.31%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 17, 2025