XP (XP) AI Stock Analysis

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XP

(NASDAQ:XP)

Rating:79Outperform

Price Target:

$21.50

▲(9.08%Upside)

XP's strong financial performance and positive earnings call are the most significant factors contributing to its score. The technical analysis supports a bullish trend, though overbought signals suggest caution. Valuation is reasonable, balancing growth prospects with current price levels. The absence of notable corporate events has no impact on the score.

Positive Factors

AUC Growth

Total AUC reached R$1,328 billion, up 8% q/q and 16% y/y, coming 5% above consensus.

Corporate & Issuer Services Revenue

Corporate & Issuer Services Revenue was R$599 million, up 9% quarter over quarter and 18% year over year, coming 10% above consensus and 6% above our estimate.

Net Inflows

Net inflows were R$23.5 billion, up 79% y/y, coming 7% above consensus.

Negative Factors

Recurring Net Income

Recurring net income was R$1,236 million, coming in 5% below consensus and our estimate.

Retail Revenue

Retail revenue was R$3,441 million, coming in 4% below consensus and 5% below our estimate.

Retail Revenue Yield

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

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

Market Cap

$10.39B

Dividend Yield<0.01%

Average Volume (3M)7.24M

Price to Earnings (P/E)12.6

Beta (1Y)1.07

Revenue Growth-2.79%

EPS Growth1.33%

CountryUS

Employees6,834

SectorFinancial

Sector Strength82

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)0.40

Shares Outstanding423,566,440

10 Day Avg. Volume5,870,220

30 Day Avg. Volume7,241,034

Financial Highlights & Ratios

PEG Ratio2.51

Price to Book (P/B)2.72

Price to Sales (P/S)0.00

P/FCF Ratio2.48

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$20.40

Price Target Upside3.50% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

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 the provision of brokerage services, asset management fees, and financial advisory services. The company earns commissions from trading activities conducted by its clients on various financial instruments, including stocks, bonds, and derivatives. Additionally, XP Inc. charges management fees for assets under management in its investment funds. The company also benefits from interest income on margin loans provided to customers for trading activities. Strategic partnerships with other financial institutions and technology providers further enhance its revenue streams, contributing to the company's overall earnings.

XP Earnings Call Summary

Earnings Call Date:May 20, 2025

(Q1-2025)

% Change Since: 6.20%|

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's financials indicate strong growth and improved financial health. The income statement highlights significant revenue and margin improvements, driven by operational efficiencies. The balance sheet shows prudent leverage management and robust equity returns. Cash flow statements underscore strong cash generation and effective capital management, positioning XP well for future opportunities in the capital markets industry.

Income Statement

Very Positive

XP has demonstrated strong revenue growth with a notable increase from $6.53 billion in 2023 to $16.25 billion in 2024. The gross profit margin in 2024 stands at 100%, indicating efficient cost management, though this is due to total revenue equaling gross profit. The net profit margin improved significantly to 27.78% in 2024, from 59.66% in 2023, due to increased revenue despite higher net income in 2023. EBIT margin improved substantially from a negative margin in prior years to 60.94% in 2024, demonstrating improved operational efficiency.

Balance Sheet

Positive

XP's balance sheet reflects a healthy equity ratio of 5.77% in 2024, indicating a conservative leverage profile, although lower than previous years. The debt-to-equity ratio improved to 1.36 from 1.83 in 2023, showcasing better leverage management. Return on equity improved to 22.53% in 2024 from 20.04% in 2023, reflecting strong equity utilization despite the volatile financial environment.

Cash Flow

Positive

The operating cash flow to net income ratio remains robust at 2.48 in 2024, indicating strong cash-generating ability compared to profits. Free cash flow growth is significant, increasing from $7.93 billion in 2023 to $11.03 billion in 2024, highlighting improved cash management. The free cash flow to net income ratio is solid at 2.44, reflecting efficient conversion of profits into free cash flow.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
7.42B	6.53B	6.51B	6.20B	5.02B
	Gross Profit
1.89B	761.11M	472.13M	2.77B	2.37B
	EBIT
-3.92B	-3.79B	-3.41B	-1.89B	-505.00M
	EBITDA
6.03B	4.81B	-3.21B	-1.66B	-361.74M
	Net Income Common Stockholders
4.51B	3.90B	3.58B	3.59B	2.08B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
74.91B	3.94B	44.09B	36.22B	22.05B
	Total Assets
347.46B	249.04B	192.03B	139.34B	96.03B
	Total Debt
115.13B	35.54B	35.52B	28.21B	32.67B
	Net Debt
109.52B	31.60B	31.97B	25.72B	30.71B
	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

Positive

Last Price19.71

Price Trends

50DMA

16.47

Positive

100DMA

15.30

Positive

200DMA

15.44

Positive

Market Momentum

MACD

0.86

Positive

RSI

69.06

Neutral

STOCH

56.76

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 19.71 is above the 20-day moving average (MA) of 19.03, above the 50-day MA of 16.47, and above the 200-day MA of 15.44, indicating a bullish trend. The MACD of 0.86 indicates Positive momentum. The RSI at 69.06 is Neutral, neither overbought nor oversold. The STOCH value of 56.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VIRT	80 Outperform	$6.45B	12.07	23.87%	2.29%	26.02%	142.79%
XP	79 Outperform	$10.39B	12.60	21.71%	<0.01%	-2.79%	1.33%
MKTX	75 Outperform	$8.33B	38.59	16.25%	1.35%	7.22%	-15.53%
SF	69 Neutral	$9.92B	18.40	11.48%	1.78%	12.85%	20.21%
JEF	67 Neutral	$10.81B	18.16	6.38%	2.86%	16.62%	139.24%
FRHC	67 Neutral	$9.45B	29.19	28.10%	―	47.17%	0.09%
Sector *	64 Neutral	$12.87B	9.81	7.76%	16985.65%	12.28%	-7.83%

* Financial Sector Average

Performance Comparison

19.50

1.76

9.92%

JEF

Jefferies

53.42

10.20

23.60%

MKTX

Marketaxess Holdings

223.25

28.78

14.80%

Stifel Financial

96.62

19.44

25.19%

VIRT

Virtu Financial

41.39

17.77

75.23%

FRHC

Freedom Holding

149.44

72.49

94.20%

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.