XP (XP) AI Stock Analysis

• Market Cap: $10.40B
• Dividend Yield: 3.29%
• Average Volume (3M): 7.58M
• Price to Earnings (P/E): 12.6
• Beta (1Y): 1.07
• Revenue Growth: -2.79%
• EPS Growth: 1.33%
• Country: US
• Employees: 6,834
• Sector: Financial
• Sector Strength: 78
• Industry: Financial - Capital Markets
• EPS (TTM): 0.41
• Shares Outstanding: 423,566,440
• 10 Day Avg. Volume: 6,337,514
• 30 Day Avg. Volume: 7,580,965
• PEG Ratio: 0.48
• Price to Book (P/B): 11.07
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 57.98
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $21.00
• Price Target Upside: 6.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 78 Outperform
• Price Target: $22.50 ▲(14.56%Upside)

XP's strong technical momentum and positive earnings call sentiment are the primary drivers of its strong score. Financial performance is solid, with notable revenue and cash flow growth, although high leverage presents some risk. The attractive valuation further supports the positive outlook.

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 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 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 Financial Statement Overview

Summary

XP exhibits strong revenue and cash flow growth, crucial for its operations in capital markets. Despite challenges in EBIT margins and a high leverage position, robust net income and cash flow metrics support its financial health. A leveraged structure poses some risk, but a high return on equity indicates efficient capital management.

Income Statement

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

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

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
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
7.45B	7.42B	6.53B	5.94B	6.20B	5.02B
	Gross Profit
2.30B	1.89B	1.62B	1.10B	2.06B	1.52B
	EBIT
-4.01B	-3.92B	-3.86B	-3.56B	-1.93B	-615.31M
	EBITDA
6.13B	6.03B	4.81B	4.05B	4.18B	2.62B
	Net Income Common Stockholders
4.72B	4.51B	3.90B	3.58B	3.59B	2.08B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
63.93B	74.91B	54.41B	41.30B	36.22B	22.05B
	Total Assets
349.97B	347.46B	249.04B	192.03B	139.34B	96.03B
	Total Debt
57.87B	115.13B	68.56B	35.52B	28.21B	32.12B
	Net Debt
49.65B	109.52B	64.62B	31.97B	25.72B	30.17B
	Total Liabilities
328.92B	327.41B	229.59B	174.99B	124.92B	85.13B
	Stockholders Equity
21.04B	20.04B	19.45B	17.04B	14.42B	10.89B
Cash Flow		Free Cash Flow
11.65B	10.85B	7.93B	1.68B	-4.37B	1.22B
	Operating Cash Flow
11.89B	11.18B	8.13B	1.80B	-4.02B	1.51B
	Investing Cash Flow
-1.10B	-1.67B	538.81M	-371.28M	-1.15B	-582.01M
	Financing Cash Flow
-5.57B	-5.78B	-4.39B	-200.30M	6.64B	788.71M

XP Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 19.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• 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 19.64 is above the 20-day moving average (MA) of 19.33, above the 50-day MA of 16.93, and above the 200-day MA of 15.46, indicating a bullish trend. The MACD of 0.78 indicates Positive momentum. The RSI at 61.04 is Neutral, neither overbought nor oversold. The STOCH value of 58.78 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	80 Outperform	$6.28B	11.75	23.87%	2.33%	26.02%	142.79%
XP	78 Outperform	$10.40B	12.56	21.71%	3.29%	-2.79%	1.33%
MKTX	75 Outperform	$8.44B	39.08	16.25%	1.34%	7.22%	-15.53%
SF	72 Outperform	$9.96B	18.18	11.48%	1.93%	12.85%	20.21%
JEF	67 Neutral	$11.05B	18.09	6.38%	3.06%	16.62%	139.24%
FRHC	67 Neutral	$9.23B	27.52	28.10%	―	47.17%	0.09%
Sector *	64 Neutral	$12.93B	9.70	7.85%	78.03%	12.07%	-7.83%