XP (XP) AI Stock Analysis

• Market Cap: $8.83B
• Dividend Yield: 3.88%
• Average Volume (3M): 5.97M
• Price to Earnings (P/E): 10.4
• Beta (1Y): 1.11
• Revenue Growth: -6.77%
• EPS Growth: 2.95%
• Country: US
• Employees: 6,834
• Sector: Financial
• Sector Strength: 74
• Industry: Financial - Capital Markets
• EPS (TTM): 0.45
• Shares Outstanding: 423,566,440
• 10 Day Avg. Volume: 6,892,527
• 30 Day Avg. Volume: 5,966,350
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 2.92
• Enterprise Value/Revenue: 3.53
• Enterprise Value/Gross Profit: 13.71
• Enterprise Value/Ebitda: 4.26
• 1Y Price Target: $22.43
• Price Target Upside: 33.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 66 Neutral
• Price Target: $18.00 ▲(7.40% Upside)

XP's overall stock score reflects strong profitability and attractive valuation, which are offset by technical challenges and high leverage. The positive sentiment from the earnings call, highlighting record net income and growth in client assets, supports the stock's potential. However, operational inefficiencies and mixed technical indicators suggest caution.

Positive Factors

Capital Distribution

The company generated capital, with the CET1 ratio rising to 18.5%, which should support capital distribution in excess of 50% in future years.

Share Price Potential

Expected share price return is 25.7%.

Negative Factors

Gross Revenue Growth

Gross revenues growth decelerated to 4% YoY, running well below guidance.

Revenue Performance

Revenue fell short across all segments, with notable weakness in retail net inflows, coming 23% below consensus.

XP Business Overview & Revenue Model

Company Description

XP 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 Money

XP 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 Financial Statement Overview

Summary

XP demonstrates strong profitability with high net profit margins and effective equity utilization. However, declining revenue growth and high leverage present potential risks. The company needs to address operational inefficiencies and manage its debt levels to ensure long-term financial stability. Despite these challenges, XP's cash flow generation remains robust, supporting its financial health.

Income Statement

XP's income statement reveals a mixed performance. The company has maintained a strong net profit margin of 67.44% TTM, indicating robust profitability. However, the revenue growth rate has declined by 2.07% TTM, suggesting challenges in expanding its revenue base. The EBIT margin is negative, reflecting operational inefficiencies, but the EBITDA margin remains healthy at 82.93% TTM, showing strong cash flow generation capabilities.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 3.33 TTM, indicating significant leverage and potential financial risk. Return on equity is solid at 23.24% TTM, demonstrating effective use of equity to generate profits. However, the high leverage could pose risks if not managed carefully, especially in volatile market conditions.

Cash Flow

Cash flow analysis indicates a decline in free cash flow growth by 11.07% TTM, which could impact future liquidity. The operating cash flow to net income ratio is low at 0.06 TTM, suggesting limited cash conversion from earnings. However, the free cash flow to net income ratio is strong at 97.42% TTM, indicating efficient cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	7.30B	7.42B	6.53B	5.94B	6.20B	5.02B
Gross Profit	1.88B	1.89B	1.62B	1.10B	2.06B	1.52B
EBITDA	6.05B	6.03B	4.81B	4.05B	4.18B	2.62B
Net Income	4.92B	4.51B	3.90B	3.58B	3.59B	2.08B
Balance Sheet
Total Assets	373.85B	347.46B	249.04B	192.03B	139.34B	96.03B
Cash, Cash Equivalents and Short-Term Investments	76.45B	74.91B	54.41B	41.30B	36.22B	22.05B
Total Debt	74.16B	115.13B	68.56B	35.52B	28.21B	32.12B
Total Liabilities	351.58B	327.41B	229.59B	174.99B	124.92B	85.13B
Stockholders Equity	22.26B	20.04B	19.45B	17.04B	14.42B	10.89B
Cash Flow
Free Cash Flow	10.36B	10.85B	7.93B	1.68B	-4.37B	1.22B
Operating Cash Flow	10.63B	11.18B	8.13B	1.80B	-4.02B	1.51B
Investing Cash Flow	-658.26M	-1.67B	538.81M	-371.28M	-1.15B	-582.01M
Financing Cash Flow	-3.84B	-5.78B	-4.39B	-200.30M	6.64B	788.71M

XP Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 16.76
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XP, the sentiment is Positive. The current price of 16.76 is below the 20-day moving average (MA) of 16.85, below the 50-day MA of 17.81, and above the 200-day MA of 15.61, indicating a neutral trend. The MACD of -0.24 indicates Negative momentum. The RSI at 50.65 is Neutral, neither overbought nor oversold. The STOCH value of 55.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for XP.

XP Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VIRT	78 Outperform	$6.48B	9.55	28.75%	2.22%	25.12%	122.80%
SF	74 Outperform	$11.85B	22.26	11.11%	1.52%	8.76%	10.32%
Sector *	68 Neutral	$17.69B	11.82	10.30%	3.73%	9.66%	0.42%
MKTX	68 Neutral	$7.09B	32.00	16.41%	1.59%	8.30%	-14.39%
JEF	68 Neutral	$13.22B	23.55	5.75%	2.42%	1.00%	46.98%
XP	66 Neutral	$8.83B	10.38	22.42%	3.88%	-6.77%	2.95%
FRHC	58 Neutral	$10.51B	127.33	6.78%	―	19.14%	-75.48%