XP (XP) AI Stock Analysis

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XP

(NASDAQ:XP)

Rating:72Outperform

Price Target:

$19.00

▲(13.84% Upside)

XP's overall score reflects strong financial performance and attractive valuation, counterbalanced by bearish technical indicators. The earnings call underscored robust growth and strategic execution, further supporting the stock's potential.

Positive Factors

Financial Performance

The EPS estimates for 2025 and 2026 have been revised upwards, indicating improved financial expectations for the company.

Revenue Growth

Revenue growth accelerated to 10%, supported by fixed income and banking products.

Stock Performance

The price target for the company's stock has been increased from US$24 to US$26, suggesting confidence in the stock's future performance.

Negative Factors

Debt Markets

Management commented on a weaker second quarter for the debt capital markets.

Revenue Yield

Retail net inflows declined 20%, with retail revenue yield deteriorating due to weaker mix and lower yield in equities.

SG&A Expenses

SG&A, which comprises expenses related to internal advisors, expanded 8% above revenue growth.

XP (XP) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$8.83B

Dividend Yield3.88%

Average Volume (3M)5.21M

Price to Earnings (P/E)10.7

Beta (1Y)1.07

Revenue Growth-2.79%

EPS Growth1.33%

CountryUS

Employees6,834

SectorFinancial

Sector Strength64

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)0.41

Shares Outstanding423,566,440

10 Day Avg. Volume4,626,025

30 Day Avg. Volume5,208,308

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap2.29

Enterprise Value/Revenue2.72

Enterprise Value/Gross Profit8.80

Enterprise Value/Ebitda3.30

Forecast

1Y Price Target

$22.43

Price Target Upside34.39% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

XP Business Overview & Revenue Model

Company DescriptionXP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers Xpeed, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, private equity, structured products, credit cards, loan operations, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.

How the Company Makes MoneyXP Inc. generates revenue primarily through brokerage and asset management fees. The company earns brokerage fees by facilitating the buying and selling of securities for its clients, which include retail investors, institutional investors, and corporate clients. Additionally, XP earns management fees from its wealth and asset management services, where it charges clients for managing and overseeing their investment portfolios. Other revenue streams include advisory fees for financial planning and consulting services. XP also benefits from strategic partnerships with various financial institutions, enhancing its product offerings and market reach, which contributes to its overall earnings.

XP Earnings Call Summary

Earnings Call Date:May 20, 2025

(Q1-2025)

% Change Since: -10.08%|

Next Earnings Date:Aug 19, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a strong performance in net income and ROE, along with growth in client assets and retail credit. However, challenges remain with lower-than-expected revenue growth and difficulties in the equity and issuer services segments.

Q1-2025 Updates

Positive Updates

Record Net Income

Achieved the all-time high quarterly net income in the company's history, posting BRL1.236 million, representing a 20% year-over-year growth.

Strong ROE Performance

Achieved a 24.1% ROE during the quarter, with a 340 bps expansion versus the first quarter of ‘24.

Growth in Client Assets

Client Assets plus AUM and AUA achieved BRL1.8 trillion, posting a 13% growth year-over-year.

Retail Credit Growth

Retail credit NII posted 48% growth year-over-year, marking BRL82 million in revenues in the quarter.

Improved Efficiency Ratio

Achieved the lowest efficiency ratio in the company's history at 34.1%, lower by 204 basis points year-over-year.

Successful Share Buyback Program

Ended the previous share buyback program and announced a new one of BRL1 billion, part of the capital distribution plan.

Negative Updates

Gross Revenue Growth Below Guidance

Total gross revenues for the quarter reached BRL4.6 billion, representing a 7% increase year-over-year, below the guidance of at least 10% growth for the year.

Issuer Services Revenue Decline

Issuer Services delivered flattish revenues year-over-year, marking BRL282 million and a decrease of 16% quarter-over-quarter.

Equity Market Challenges

Equities have been a drag on retail revenues with lower average trading volume at B3 impacting negatively.

Company Guidance

During the First Quarter 2025 Earnings Call, the company reported significant financial metrics, demonstrating robust growth and strategic execution. Client Assets, including AUM and AUA, reached BRL1.8 trillion, marking a 13% year-over-year growth. The active client base expanded to 4.7 million, a 2% increase from the previous year. Gross revenues for the quarter were BRL4.6 billion, showing a 7% growth year-over-year, while ABG grew by 16% year-over-year to BRL1.3 billion. The company achieved a record-high quarterly net income of BRL1.236 million, a 20% increase year-over-year. ROE was reported at 24.1%, expanding by 340 basis points compared to the first quarter of 2024. The capital ratio was comfortably positioned at 19%, with a 130 basis point increase quarter-over-quarter. Additionally, diluted EPS grew by 24% year-over-year, outpacing net income growth, attributed to the execution of a share buyback program. The company also recorded BRL24 billion in net new money, a 79% year-over-year increase, and maintained a retail net new money target of around BRL20 billion per quarter, achieving a 54% growth year-over-year.

XP Financial Statement Overview

Summary

XP demonstrates strong revenue and cash flow growth, essential for its operations in the capital markets. However, profitability challenges are present due to negative EBIT margins and high leverage, mitigated by robust net income and solid return on equity.

Income Statement

Positive

The company demonstrates strong revenue growth, with a notable increase of 25.2% from 2023 to 2025. Despite the high revenue growth, the company faces challenges in profitability, as indicated by a negative EBIT margin. However, the EBITDA margin remains positive, suggesting strong operational cash flow generation, which is vital in the financial industry. The net profit margin is robust due to significant net income figures, enhancing overall profitability.

Balance Sheet

Positive

XP shows a solid equity base with an increasing trend in stockholders' equity. The debt-to-equity ratio is relatively high at 2.75 in TTM, indicating a leveraged position that could pose risks if not managed properly. However, the return on equity is impressive at 22.4%, reflecting effective utilization of equity to generate profits. The equity ratio of 6.0% suggests a moderate reliance on equity financing.

Cash Flow

Positive

The company's cash flow dynamics are strong, with stable growth in operating cash flow and free cash flow. The operating cash flow to net income ratio of 2.52 highlights efficient cash generation from core operations. Free cash flow growth rate is commendable, ensuring liquidity for future investments and debt servicing. The free cash flow to net income ratio of 2.47 further underscores the ability to convert earnings into cash effectively.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	7.42B	6.53B	5.94B	6.20B	5.02B
Gross Profit	1.89B	1.62B	1.10B	2.06B	1.52B
EBITDA	6.03B	4.81B	4.05B	4.18B	2.62B
Net Income	4.51B	3.90B	3.58B	3.59B	2.08B
Balance Sheet
Total Assets	347.46B	249.04B	192.03B	139.34B	96.03B
Cash, Cash Equivalents and Short-Term Investments	74.91B	54.41B	41.30B	36.22B	22.05B
Total Debt	115.13B	68.56B	35.52B	28.21B	32.12B
Total Liabilities	327.41B	229.59B	174.99B	124.92B	85.13B
Stockholders Equity	20.04B	19.45B	17.04B	14.42B	10.89B
Cash Flow
Free Cash Flow	10.85B	7.93B	1.68B	-4.37B	1.22B
Operating Cash Flow	11.18B	8.13B	1.80B	-4.02B	1.51B
Investing Cash Flow	-1.67B	538.81M	-371.28M	-1.15B	-582.01M
Financing Cash Flow	-5.78B	-4.39B	-200.30M	6.64B	788.71M

XP Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price16.69

Price Trends

50DMA

18.65

Negative

100DMA

17.07

Negative

200DMA

15.61

Positive

Market Momentum

MACD

-0.65

Positive

RSI

38.51

Neutral

STOCH

52.79

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XP, the sentiment is Neutral. The current price of 16.69 is below the 20-day moving average (MA) of 17.24, below the 50-day MA of 18.65, and above the 200-day MA of 15.61, indicating a neutral trend. The MACD of -0.65 indicates Positive momentum. The RSI at 38.51 is Neutral, neither overbought nor oversold. The STOCH value of 52.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for XP.

XP Risk Analysis

XP disclosed 83 risk factors in its most recent earnings report. XP 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 0 New Risks

XP Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VIRT	81 Outperform	$6.69B	9.84	28.75%	2.21%	25.12%	122.80%
SF	75 Outperform	$11.53B	21.70	11.11%	1.58%	8.75%	10.32%
FRHC	73 Outperform	$0.00	132.85	7.12%	―	20.50%	-76.59%
XP	72 Outperform	$8.83B	10.67	21.71%	3.88%	-2.79%	1.33%
MKTX	70 Outperform	$7.79B	36.37	16.25%	1.44%	7.22%	-15.53%
JEF	68 Neutral	$11.90B	21.87	5.75%	2.68%	1.00%	46.98%
Sector *	65 Neutral	£5.10B	9.36	5.51%	4.90%	24.59%	-22.68%

* Financial Sector Average

Performance Comparison

16.76

0.88

5.54%

JEF

Jefferies

57.69

5.14

9.78%

MKTX

Marketaxess Holdings

207.81

-18.49

-8.17%

Stifel Financial

112.20

34.38

44.18%

VIRT

Virtu Financial

42.89

15.91

58.97%

FRHC

Freedom Holding

188.75

104.41

123.80%

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: Jul 22, 2025