Core Insights - StoneCo Ltd. reported quarterly earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, and showing an increase from $0.30 per share a year ago, resulting in an earnings surprise of +8.33% [1] - The company achieved revenues of $672.06 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.91% and increasing from $615.13 million year-over-year [2] - StoneCo's stock has increased by approximately 68.3% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.36, with expected revenues of $661.83 million, while the estimate for the current fiscal year is $1.49 on $2.65 billion in revenues [7] - The trend of estimate revisions for StoneCo has been favorable, contributing to a Zacks Rank 1 (Strong Buy) for the stock, indicating expectations of outperformance in the near future [6] Industry Context - The Internet - Software industry, to which StoneCo belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, highlighting the importance of monitoring these revisions for investment decisions [5]

Financial Data and Key Metrics Changes - The adjusted net income increased by 27% year over year, reaching BRL631 million, primarily driven by financial services operations which grew by 21% [14][15] - Adjusted basic EPS rose to BRL2.33 per share, representing a 45% year over year increase, bolstered by share repurchases [15] - ROE for financial services segment reached 30%, while consolidated ROE was 22%, both showing significant year-over-year growth [15][16] - Revenues from continuing operations grew 20% year over year to BRL3.5 billion, driven by repricing initiatives [16] Business Line Data and Key Metrics Changes - Financial services operations were the main contributor to growth, with a 21% increase in revenue [14] - Payments active client base grew 17% year over year to 4.5 million clients, with TPV for MSNBs growing 12% year over year to BRL122 billion [19] - Banking client base increased by 23% year over year, reaching 3.3 million clients, with deposits growing 36% year over year [21] - Credit portfolio grew 25% sequentially to BRL1.8 billion, with working capital disbursements increasing by 41% quarter over quarter [23] Market Data and Key Metrics Changes - The company noted a deceleration in TPV growth due to macroeconomic challenges and a reduction in clients' same-store sales [20] - The anticipated TPV growth for the second half of the year is expected to stabilize at low double digits [20] Company Strategy and Development Direction - The company is focusing on financial services, targeting over 90% of the total addressable market, while software is now viewed as a value-added layer [5][6] - Recent divestitures, including the sale of Lynx and SimpliVet, are aimed at reallocating capital towards higher growth segments [6][7] - The company plans to return excess capital to shareholders if no immediate growth opportunities are identified [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a challenging macroeconomic environment while maintaining growth [14][25] - The company is monitoring TPV dynamics closely, acknowledging risks to 2027 guidance due to softer overall market growth [36] Other Important Information - The company has shifted its reporting to focus on continuing operations, with discontinued operations presented separately [10][26] - The effective tax rate decreased to 15% from 22.5% year over year, contributing to improved net income performance [29] Q&A Session All Questions and Answers Question: How comfortable is the company with delivering the 2027 guidance given the slower growth environment? - Management acknowledged the softer market growth but emphasized confidence in long-term guidance, stating that TPV growth is one dimension of a broader strategy [36] Question: What is the plan for the capital from the Lynx sale? - The company plans to return capital to shareholders in the absence of new growth opportunities, with specifics to be provided upon closing the transaction [39][40] Question: Is the financial income growth sustainable? - Management indicated that gross profit generation is driven by effective tax rates and operational leverage, suggesting sustainability in financial income growth [70] Question: What is the expected cost of risk moving forward? - The company expects the cost of risk to return to mid-teens levels, closer to 13.5%, after a one-time increase to 20% [81][98] Question: How does the company view the competitive environment and pricing strategy? - Management sees a rational competitive environment and does not expect significant changes in pricing strategy, even with potential interest rate cuts in the future [105][106]

Strategic Divestments - StoneCo divested Linx and related assets to TOTVS for an enterprise value of R$305 billion and a total value of R$341 billion[12] - SimplesVet was divested to PetLove for an enterprise value of R$140 million and a total value of R$155 million[12] - The value captured from divestments represents approximately 25% of StoneCo's market capitalization, while the divested assets accounted for less than 5% of the company's adjusted net income[11, 14] Financial Performance (2Q25) - StoneCo's adjusted basic EPS for continuing operations increased by 409% year-over-year[20, 45] - Adjusted net income from continuing operations increased by 237% year-over-year to R$5981 million[20, 39] - Total revenue and income from continuing operations grew by 202% year-over-year to R$35009 million[34, 39] - Adjusted gross profit from continuing operations increased by 139% year-over-year to R$15615 million[39] Business Segments - MSMB (Micro, Small, and Medium Businesses) payments client base increased by 64% year-over-year[26] - MSMB TPV (Total Payment Volume) increased by 12% year-over-year[26] - Retail deposits increased by 36% year-over-year[28] - Credit portfolio increased by 25% quarter-over-quarter[30] Guidance Update - StoneCo updated its 2025 adjusted gross profit guidance to > R$6375 billion, reflecting a 145% year-over-year increase[17] - The company updated its 2025 adjusted basic EPS guidance to > R$96 per share, representing a 32% year-over-year increase[17] Future Outlook (2027 Guidance) - StoneCo projects MSMB TPV to exceed R$670 billion by 2027, with a CAGR of +14%[46] - The company anticipates retail deposits to surpass R$140 billion by 2027, with a CAGR of +17%[46] - StoneCo expects its credit portfolio to exceed R$55 billion by 2027, with a CAGR of +66%[46] - The company forecasts adjusted gross profit to exceed R$102 billion by 2027, with a CAGR of +18%[46] - StoneCo projects adjusted basic EPS to exceed R$150 per share by 2027, with a CAGR of +27%[46]

Core Viewpoint - StoneCo Ltd. reported its financial results for the second quarter ended June 30, 2025, highlighting its performance in the financial technology sector [1]. Financial Results - The financial results for Q2 2025 were released on August 7, 2025, and are available on the company's Investor Relations website [1]. - A teleconference to discuss these results was scheduled for the same day at 5:00 PM ET / 6:00 PM BRT [2]. Company Overview - StoneCo is recognized as a leading provider of financial technology solutions, enabling merchants to conduct commerce seamlessly across various channels [4]. - The company offers a range of services including payments, banking, credit, and software solutions to help businesses grow [4].

Core Insights - StoneCo Ltd. is expected to report second-quarter 2025 results on August 7, with anticipated year-over-year growth in revenues and earnings per share (EPS) [1][9] Financial Performance - In the previous quarter, StoneCo reported an EPS of 34 cents, exceeding the Zacks Consensus Estimate of 32 cents, with total revenues and income showing year-over-year increases [2] - The total Payments Active Client base reached 4.4 million, reflecting a 4.3% sequential growth [2] - The Zacks Consensus Estimate for quarterly revenues is projected at $653.1 million, indicating a 6.2% increase from the same period last year [7] Growth Drivers - The second-quarter performance is likely to benefit from strong momentum in financial services and software sectors [3] - Key growth drivers include robust MSMB (Micro, Small and Medium-sized Businesses) offerings, which are expected to contribute positively to financial results [4] - Expansion in credit offerings and enhancements in banking solutions for small and medium-sized businesses are anticipated to boost banking revenues [5] Operational Efficiency - The company's focus on cost management is expected to enhance profitability and operational efficiency, driving significant operating leverage [6] - Despite these positive factors, increased competition from banks serving Small and Medium Enterprises may pose challenges [6] Earnings Predictions - The EPS estimate has been revised upward by 2 cents to 36 cents, suggesting a 20% increase from the prior-year quarter [7] - The company has an Earnings ESP of +12.68% and a Zacks Rank of 1, indicating a strong likelihood of an EPS beat [8]

Core Insights - The U.S. market experienced a slight decline as investors reacted to new earnings reports, economic data, and tariff announcements, particularly regarding semiconductor and pharmaceutical imports [1] - In the current environment characterized by geopolitical risks and policy changes, value investing is highlighted as a favorable strategy, focusing on purchasing undervalued stocks [1] Investment Strategy - Value investing involves buying stocks priced below their intrinsic value, capitalizing on market mispricing to achieve future profits [1] - Earnings yield is a key metric for value investors, calculated as (Annual Earnings per Share/Market Price) x 100, serving as a reverse indicator of the price-to-earnings (P/E) ratio [3] - A high earnings yield suggests a stock may be undervalued, while a low yield indicates potential overvaluation [3] Stock Selection Criteria - An earnings yield greater than 10% is set as a primary screening criterion, supplemented by additional parameters [5] - Estimated EPS growth for the next 12 months must be greater than or equal to the S&P 500, comparing forward EPS estimates with actual EPS [5] - Average daily trading volume over the past 20 days should be at least 100,000, indicating sufficient liquidity [6] - Current stock price must be $5 or higher, and stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform peers [7] Highlighted Stocks - Barrick Mining Corporation is a leading gold mining company with projected earnings growth of 56% and 24% for 2025 and 2026, respectively, and a Zacks Rank of 1 [8] - Astrana Health, a tech-enabled healthcare provider, anticipates earnings growth of 77% and 49% for 2025 and 2026, respectively, also holding a Zacks Rank of 1 [9][10] - StoneCo Ltd., a fintech company, expects earnings growth of 10.4% and 16% for 2025 and 2026, with a Zacks Rank of 1 [11] - Plains GP Holdings, involved in crude oil transportation and marketing, projects earnings growth of 206% and 24% for 2025 and 2026, respectively, and has a Zacks Rank of 1 [12] - PHINIA Inc., a supplier for the mobility industry, forecasts earnings growth of 14% and 19.5% for 2025 and 2026, respectively, and holds a Zacks Rank of 1 [13]

Group 1: Core Insights - Several tech stocks are gaining attention for their affordability and strong buy ratings, supported by positive earnings estimate revisions [1][2] - The Zacks Internet-Software Industry is in the top 32% of over 240 Zacks industries, highlighting the potential for growth among its companies [3] Group 2: Company Highlights - Udemy (UDMY) has shown increased profitability, with annual earnings expected to rise 194% in fiscal 2025 to $0.47 per share, and projected EPS growth of 24% in FY26 [5][6] - StoneCo (STNE) is trading under $15 per share with a forward earnings multiple of 8.5X, and is expected to see EPS growth of 10% this year and 16% in FY26 [7][8] - Hewlett Packard (HPE) is trading under $20 per share with a forward earnings multiple of 10X, and has surpassed $1 billion in AI systems revenue, with projected top-line growth of over 14% in FY25 and FY26 [9][10] Group 3: Financial Metrics - Udemy's EPS estimates for FY25 and FY26 are $0.47 and $0.58 respectively, with a year-over-year growth estimate of 193.75% for FY25 [6] - StoneCo's annual sales exceed $2 billion, with EPS expected to rise to $1.73 in FY26 [7] - Hewlett Packard's annualized revenue run rate for AI systems reached $2.2 billion, with EPS projected to rebound to $2.30 in FY26 [10][13]

Group 1: Mitsui & Co. - Mitsui & Co. operates more than 860 subsidiaries and associated companies across various sectors including chemicals, foodstuffs, and real estate [1] - The company has a Zacks Rank of 1 (Strong Buy) and a 6% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [1] - Mitsui & Co. has a price-to-earnings ratio (P/E) of 11.16, lower than the industry average of 12.00, and possesses a Value Score of A [2] Group 2: StoneCo - StoneCo provides a cloud-based technology platform for electronic commerce across in-store, online, and mobile channels [2] - The company holds a Zacks Rank of 1 and has seen a 5.7% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [2] - StoneCo has a price-to-earnings ratio (P/E) of 8.44, significantly lower than the industry average of 29.80, and has a Value Score of B [3] Group 3: SB Financial Group - SB Financial Group is a financial services holding company offering a full range of services including wealth management and commercial lending [3] - The company has a Zacks Rank of 1 and a 9.9% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [3] - SB Financial Group has a price-to-earnings ratio (P/E) of 8.51, compared to the industry average of 9.70, and possesses a Value Score of B [4]

Core Viewpoint - StoneCo Ltd. (STNE) has experienced significant selling pressure, resulting in a 22.3% decline over the past four weeks, but analysts anticipate better earnings than previously predicted, indicating potential for recovery [1]. Group 1: Technical Analysis - The Relative Strength Index (RSI) is a momentum oscillator that helps identify whether a stock is oversold, with readings below 30 indicating oversold conditions [2]. - STNE's current RSI reading of 27.46 suggests that the heavy selling may be exhausting, indicating a potential bounce back towards equilibrium in supply and demand [5]. Group 2: Fundamental Analysis - There is a strong consensus among sell-side analysts to raise earnings estimates for STNE, with a 3.5% increase in the consensus EPS estimate over the last 30 days, which typically correlates with price appreciation [7]. - STNE holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [8].

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell- side) analysts often affect a stock's price, do they really matter? Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about StoneCo Ltd. (STNE) . StoneCo currently has an average brokerage recomme ...