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 ...

Core Insights - The global fintech market is projected to reach $1.12 trillion by 2032, attracting investor interest in disruptors like StoneCo and Upstart that can scale profitably amid changing regulatory and macroeconomic conditions [1] Company Overview: StoneCo - StoneCo is focused on Brazil's micro, small, and medium business (MSMB) market, offering a full-stack payments, banking, and credit solution [2] - The company reported a 17% year-over-year increase in MSMB total payment volume (TPV) to R$119.5 billion and a 17% rise in active clients to 4.3 million in Q1 2025 [4] - Retail deposits grew by 38% year over year to R$8.3 billion, with R$6.3 billion in time deposits, enhancing funding diversification [5] - StoneCo's credit portfolio stands at R$1.4 billion with non-performing loans (NPLs) at 4.57%, indicating effective risk management [5] - A strategic divestiture of its software segment, including the R$3.41 billion sale of Linx, is expected to improve margins and operational focus [6] - The company has seen an increase in "heavy users" of its services, rising from 26% to 38% [6] Company Overview: Upstart - Upstart utilizes an AI-driven underwriting platform, automating 92% of loans in Q1 2025, with conversion rates improving to 19% [8] - The company is expanding into new verticals such as auto refinancing and HELOCs, with auto originations increasing by 42% sequentially and HELOC volumes growing by 52% [9] - Over 50% of Upstart's loan volume is now backed by committed capital, with 32% of originations coming from super-prime borrowers, indicating improved credit quality [9] Valuation and Performance Comparison - StoneCo trades at a forward Price/Sales (P/S) ratio of 1.39, while Upstart's P/S ratio is 6.64, suggesting StoneCo is more attractively valued [10][15] - StoneCo's sales and EPS estimates for 2025 imply year-over-year increases of 7.6% and 10.4%, respectively [12] - Upstart's sales estimates for 2025 indicate a significant year-over-year rise of 59.5% [14] - Year-to-date, StoneCo shares have outperformed both Upstart and the S&P 500 composite [16] Conclusion - StoneCo presents a compelling investment opportunity with its focus on profitable growth in an emerging market, while Upstart is recognized for its innovative approach in credit underwriting [18] - Despite both companies holding a Zacks Rank of 3 (Hold), StoneCo's valuation appears more favorable at this time [19]

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 Viewpoint - StoneCo Ltd. has announced significant divestments in its software segment to unlock shareholder value and streamline operations, allowing management to focus on core growth strategies [1][2]. Group 1: Divestment Details - The divested assets accounted for approximately 79% of the software segment's revenue and 71% of its profitability in 2024, representing 9% of StoneCo's total revenues and 6% of its profitability [2]. - The sale of Linx and related software assets to TOTVS is valued at R$3.05 billion, plus an estimated R$360 million in net cash, totaling R$3.41 billion [2]. - The scope of the Linx sale includes software for various verticals such as education, retail, and healthcare [3]. - The sale of SimplesVet to PetLove is valued at R$140 million, representing approximately 4x revenue, and has already received regulatory approval [5]. Group 2: Remaining Software Businesses - The remaining software businesses not included in the divestments generated R$326 million in revenues and R$32 million in Adjusted EBITDA in 2024, and will be evaluated for strategic fit and long-term value [6]. Group 3: Use of Proceeds - StoneCo plans to disclose detailed plans for the use of proceeds from the divestments upon transaction closing, with an expectation to return excess capital to shareholders when immediate growth opportunities are not available [8].

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 ...