StoneCo triggered by recent performance
StoneCo (STNE) has been on many watchlists after a recent stretch of negative short term returns, including an 18.8% decline over the past month and a 6.6% decline over the past 3 months.
See our latest analysis for StoneCo.
Despite the recent 18.8% 1 month share price decline to US$13.35 and softer short term momentum, StoneCo still shows a 20.3% 1 year total shareholder return and a 49.3% 3 year total shareholder return.
If you are reassessing your exposure to fintech and payment names, it can be helpful to compare them with other high growth themes using our screener for 20 top founder-led companies
With StoneCo trading at US$13.35 and data suggesting a wide gap to some valuation estimates, the key question is whether recent weakness offers a genuine entry point or if the market is already pricing in future growth.
Most Popular Narrative: 34.2% Undervalued
With StoneCo last closing at $13.35 versus a narrative fair value of $20.29, the current pricing gap centers on what future earnings power could look like.
Cross-selling of end-to-end financial solutions (payments, digital banking, working capital credit) is increasing client engagement and wallet share, demonstrated by growing deposit balances (+36% year-over-year) and credit portfolio expansion (+25% sequentially). This is supporting higher recurring revenue and long-term net earnings improvement.
Want to see what kind of revenue path and profit margins sit behind that valuation gap? The narrative leans on richer earnings, rising returns, and a tighter share count to back up that $20.29 figure.
Result: Fair Value of $20.29 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this depends on Brazil risk and competition not intensifying, as slower TPV growth or higher credit losses could quickly challenge those earnings assumptions.
Find out about the key risks to this StoneCo narrative.
Next Steps
With mixed signals around valuation, growth, and risk, it helps to move quickly, stress test the assumptions, and see the full picture for yourself using 4 key rewards and 1 important warning sign
Looking for more investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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