Key Takeaways STNE is refocusing on MSMB financial services and divesting key software assets like Linx for R$3.41 billion.UPST automated 92% of Q1 loans and saw 42% sequential growth in auto originations.STNE trades at 1.39X forward P/S vs. UPST's 6.64X, with STNE seen as more attractively valued.As the global fintech market accelerates toward a projected $1.12 trillion by 2032, per the Fortune Business Insights report, investors are eyeing disruptors that can scale profitably while navigating evolving reg ...

Core Insights - StoneCo Ltd. is strategically divesting a significant portion of its software segment, which accounts for 79% of its software segment revenues in 2024, to focus on core financial services and micro, small, and medium businesses (MSMB) [1][9] Group 1: Strategic Moves - The proposed sale of Linx and related software assets to TOTVS for R$3.41 billion has been agreed upon, alongside the sale of SimplesVet to PetLove for R$140 million [2] - This divestiture is expected to enhance operating efficiency and profit margins as StoneCo aims to become Brazil's leading platform for MSMBs [3] Group 2: Financial Performance - In Q1 2025, StoneCo's MSMB total payment volume (TPV) increased by 17% year over year to R$119.5 billion, driven by effective repricing efforts and expanding product adoption [3][9] - The client base for MSMBs grew by 17% to 4.3 million active clients [3] Group 3: Growth Strategies - The bundling strategy has proven successful, with clients using three or more products increasing to 38%, up from 26% a year ago, indicating effective cross-selling of integrated payments, credit, and banking services [4] - The banking segment is also expanding rapidly, with total retail deposits rising by 38% to R$8.3 billion [4] Group 4: Market Trends - The PIX instant payment system has become a significant monetization lever, with transaction volumes increasing by 95% year over year, enhancing client deposits and engagement [5] - StoneCo projects MSMB TPV to exceed R$670 billion by 2027, reflecting a 14% compound annual growth rate (CAGR) from 2024 levels [5] Group 5: Competitive Landscape - PagSeguro Digital Ltd. reported that MSMB TPV grew by 11.2% year over year to R$95.2 billion, with a focus on higher-value MSMBs [6] - MercadoLibre's Mercado Pago saw TPV rise by 43% year over year to $58.3 billion, with a 30%+ increase in monthly fintech users [7] Group 6: Stock Performance and Valuation - StoneCo's shares have surged by 76.5% year to date, outperforming the broader industry and the S&P 500 Index [8] - The Zacks Consensus Estimate for 2025 EPS suggests a year-over-year growth of 10.4%, while the estimate for 2026 indicates a 16.1% increase [10] - StoneCo's shares are currently trading at a forward 12-month P/E of 8.66X, significantly below the industry average of 40.07X, indicating a potentially undervalued position [12]

Core Insights - StoneCo Ltd. is strategically focusing on the micro, small, and medium business (MSMB) segment in Brazil's digital payments landscape, reporting a 17% year-over-year growth in MSMB total payment volume (TPV) to R$119.5 billion in Q1 2025 [1][7] - The company’s bundling strategy has led to a significant increase in heavy users, rising to 38% from 26% year-over-year, indicating strong cross-sell momentum [2][7] - StoneCo projects a continued growth trajectory with MSMB TPV expected to exceed R$670 billion by 2027, reflecting a 14% compound annual growth rate (CAGR) [3][7] Company Performance - StoneCo's active MSMB client base increased by 17% year-over-year to 4.3 million, demonstrating robust traction despite macroeconomic challenges [1][7] - The company has seen a 95% year-over-year growth in PIX transactions, which are replacing traditional debit transactions and enhancing client deposits [2] - StoneCo's shares have surged 71.5% year-to-date, outperforming the broader industry and the S&P 500 Index [6] Peer Comparison - PagSeguro Digital Ltd. reported an 11.2% year-over-year increase in MSMB TPV to R$95.2 billion, with MSMB segment accounting for 74% of its total TPV in Q1 2025 [4] - MercadoLibre, Inc. achieved a total payment volume of $58.3 billion, up 43% year-over-year, with significant growth in active fintech users [5] Financial Estimates - The Zacks Consensus Estimate for StoneCo's 2025 EPS suggests a 10.37% growth year-over-year, while the 2026 estimate indicates a 16.11% increase [8] - StoneCo's current forward 12-month P/E ratio is 8.42X, significantly below the industry average of 40.18X, indicating a potentially undervalued stock [10]

StoneCo Ltd. (NASDAQ: STNE ), a Brazilian fintech company in which Berkshire Hathaway ( BRK.A ) took a stake in the IPO, has been one of my preferred international fintech stocks for a while now. Although I did complete a profitableDilantha De Silva is an experienced equity analyst and investment researcher with over 10 years in the investment industry. He writes insightful articles for Seeking Alpha, GuruFocus, TipRanks, and ValueWalk, with a significant following on Seeking Alpha. Dilantha’s expertise spa ...

Company Performance - StoneCo Ltd. ended the recent trading session at $14.87, showing a -1.98% change from the previous day's closing price, underperforming the S&P 500 which lost 0.4% [1] - Prior to the recent trading, shares of StoneCo had gained 0.53%, lagging behind the Computer and Technology sector's gain of 6.34% and the S&P 500's gain of 4.97% [1] Upcoming Earnings - The upcoming earnings release for StoneCo Ltd. is scheduled for August 7, 2025, with analysts expecting earnings of $0.34 per share, indicating a year-over-year growth of 13.33% [2] - The consensus estimate for quarterly revenue is projected at $671.49 million, reflecting a 9.16% increase from the same period last year [2] Full Year Projections - For the full year, Zacks Consensus Estimates project earnings of $1.44 per share and revenue of $2.73 billion, representing changes of +6.67% and +10.94% respectively from the previous year [3] - Recent adjustments to analyst estimates for StoneCo Ltd. indicate evolving short-term business trends, with positive revisions suggesting optimism about the business outlook [3] Valuation Metrics - StoneCo Ltd. is currently trading at a Forward P/E ratio of 10.53, which is a discount compared to the industry average Forward P/E of 28.28 [6] - The company's PEG ratio stands at 0.42, significantly lower than the average PEG ratio of 2.18 for the Internet - Software industry [6] Industry Ranking - The Internet - Software industry, which includes StoneCo Ltd., ranks in the top 26% of all industries according to the Zacks Industry Rank, with a current rank of 64 [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Key Takeaways STNE stock has jumped 108.7% YTD, outperforming peers like PAGS and DLO by a wide margin. StoneCo's MSMB client base, PIX volumes and retail deposits all posted solid Q1 growth. STNE trades at 10.67X forward P/E, well below its three-year high and industry average of 40.58X.StoneCo Ltd. (STNE) shares have surged 108.7%, significantly outperforming the Internet–Software industry and the S&P 500, which rose around 16.2% and 5.2%, respectively. This impressive rally also puts StoneCo ahead of m ...

Group 1 - StoneCo Ltd. will announce its second quarter 2025 financial results on August 07, 2025, after market close [1] - A conference call to discuss the financial results will take place on the same day at 5:00 PM ET [1] - The company will enter a Quiet Period related to its second quarter 2025 financial results starting July 23, 2025 [3] Group 2 - Stone is recognized as a leading provider of financial technology and software solutions, enabling merchants to conduct commerce across multiple channels [4]

Company Performance - StoneCo Ltd. closed at $16.18, with a gain of +1.13% from the previous trading session, outperforming the S&P 500 which gained 0.83% [1] - The stock has increased by 15.69% over the past month, while the Computer and Technology sector gained 8.25% and the S&P 500 gained 4.99% during the same period [1] Upcoming Earnings - The upcoming EPS for StoneCo Ltd. is projected at $0.34, indicating a 13.33% increase compared to the same quarter of the previous year [2] - Revenue is anticipated to be $671.49 million, reflecting a 9.16% increase from the same quarter last year [2] Fiscal Year Estimates - For the entire fiscal year, earnings are estimated at $1.44 per share, representing a +6.67% change from the previous year [3] - Revenue for the fiscal year is projected at $2.73 billion, indicating a +10.94% change from the prior year [3] Analyst Estimates - Recent adjustments to analyst estimates for StoneCo Ltd. reflect short-term business trends, with positive revisions indicating analysts' confidence in the company's performance [4] - The Zacks Rank system, which assesses these estimate changes, currently ranks StoneCo Ltd. at 2 (Buy) [6] Valuation Metrics - StoneCo Ltd. has a Forward P/E ratio of 11.11, which is a discount compared to the industry average Forward P/E of 28.74 [7] - The company has a PEG ratio of 0.44, significantly lower than the Internet - Software industry average PEG ratio of 2.22 [7] Industry Context - The Internet - Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 46, placing it in the top 19% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Concept - The price-to-book (P/B) ratio is a key metric for value investors to identify undervalued stocks with potential for exceptional returns, calculated as market price per share divided by book value per share [1][5] Understanding Book Value - Book value represents the total value remaining for shareholders if a company were to liquidate its assets after settling all liabilities, calculated by subtracting total liabilities from total assets [3][4] P/B Ratio Insights - A P/B ratio under 1.0 indicates a potentially undervalued stock, while a ratio above 1.0 suggests overvaluation [5][6] - Stocks with low P/B ratios can indicate strong growth prospects, but a low ratio may also reflect weak asset returns or overstated assets [7][8] Screening Parameters for Value Stocks - Stocks should have a P/B ratio lower than the industry median, a P/S ratio below the industry median, and a P/E ratio using F(1) estimates lower than the industry median [11][12] - A PEG ratio under 1 indicates undervaluation relative to growth prospects, and stocks must trade at a minimum price of $5 [13] - High trading volume and favorable Zacks Rank (1 or 2) are also important criteria for screening [14] Identified Low P/B Stocks - Centene Corporation (CNC) has a projected 3-5 year EPS growth rate of 11.5% and holds a Zacks Rank of 2 with a Value Score of A [16] - CVS Health (CVS) has a projected EPS growth rate of 11.4% and also holds a Zacks Rank of 2 with a Value Score of A [16] - The ODP Corporation (ODP) has a projected EPS growth rate of 14% and holds a Zacks Rank of 1 with a Value Score of A [17] - StoneCo (STNE) has a projected EPS growth rate of 25.3% and holds a Zacks Rank of 2 with a Value Score of B [18] - Paysafe Limited (PSFE) has a projected EPS growth rate of 17.9% and holds a Zacks Rank of 1 with a Value Score of A [19]

Company Overview - StoneCo Ltd. (STNE) currently has a Momentum Style Score of B, indicating potential for strong performance based on recent trends [3] - The company holds a Zacks Rank of 2 (Buy), suggesting it is positioned favorably in the market [4] Price Performance - Over the past week, STNE shares have increased by 5.52%, while the Zacks Internet - Software industry remained flat [6] - In a longer time frame, STNE's monthly price change is 12.53%, significantly outperforming the industry's 0.69% [6] - Over the past quarter, STNE shares have risen by 45.18%, and over the last year, they have gained 28.11%, compared to the S&P 500's increases of 8.73% and 13.86%, respectively [7] Trading Volume - The average 20-day trading volume for STNE is 6,293,092 shares, which serves as a bullish indicator when combined with rising stock prices [8] Earnings Outlook - In the past two months, two earnings estimates for STNE have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $1.38 to $1.44 [10] - For the next fiscal year, two estimates have also moved upwards, indicating positive sentiment regarding future earnings [10] Conclusion - Given the strong price performance, positive earnings outlook, and favorable momentum indicators, STNE is recommended as a stock to consider for near-term investment [12]