Is DLocal (DLO) Pricing Reflect Its 57.7% One Year Surge And Growth Prospects

• Wondering if DLocal at around US$12.96 is priced for its potential or already baking in a lot of optimism? This article focuses squarely on what the numbers say about value.
• The stock has returned 0.3% over the last week and 5.9% over the last month, while the 1 year return sits at 57.7% against a negative 7.9% year to date and a 3 year return of 19.9%.
• Recent price moves are set against ongoing interest in fintech infrastructure and cross border payment platforms. Investors have been reassessing growth prospects and risk profiles across the group. Sector peers and payment providers have also featured in headlines about regulation, competition and capital allocation, which helps frame how sentiment can shift for DLocal.
• DLocal currently has a valuation score of 4 out of 6, which reflects how it stacks up on key pricing checks. This sets up a closer look at methods like P/E, cash flow and asset based models, before turning to an approach that can help you put all of those signals into a clearer story.

DLocal delivered 57.7% returns over the last year. See how this stacks up to the rest of the Diversified Financial industry.

Approach 1: DLocal Excess Returns Analysis

The Excess Returns model looks at whether DLocal is expected to earn more on its equity than the return that shareholders require, and then capitalizes those surplus profits into an estimate of fair value per share.

For DLocal, the starting point is a Book Value of $1.93 per share and a Stable Book Value of $3.20 per share, based on estimates from 4 analysts. Expected earnings are captured in a Stable EPS of $1.29 per share, sourced from weighted future Return on Equity estimates from 6 analysts. That aligns with an Average Return on Equity of 40.23%, which is above the implied Cost of Equity of $0.28 per share.

The gap between what the business is expected to earn and what equity investors require is the Excess Return, at $1.01 per share. Aggregating these future excess returns results in an intrinsic value estimate of about $22.02 per share. Compared with the current share price of around $12.96, this indicates the stock is 41.2% undervalued on this model.

Result: UNDERVALUED

Our Excess Returns analysis suggests DLocal is undervalued by 41.2%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for DLocal.

Approach 2: DLocal Price vs Earnings

P/E is a useful way to think about valuation for a profitable company like DLocal because it links what you pay directly to the earnings the business is already generating. It is a quick shorthand for how many dollars investors are willing to pay today for each dollar of current earnings.

In general, higher growth expectations and lower perceived risk can justify a higher P/E ratio, while slower growth and higher risk tend to point to a lower, more cautious multiple. DLocal currently trades on a P/E of 19.42x. That sits above the Diversified Financial industry average P/E of 15.36x, but below the peer group average of 37.07x. This suggests the market is assigning it a middle-of-the-road premium within its space.

Simply Wall St’s Fair Ratio for DLocal is 18.55x, which is a proprietary estimate of what a reasonable P/E could be, given factors such as its earnings profile, industry, profit margins, market cap and company specific risks. This can often be more useful for you than a simple peer or industry comparison, because it tries to adjust for differences in quality and risk between companies. With the current P/E only slightly above the Fair Ratio, DLocal looks close to fairly priced on this metric.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your DLocal Narrative

Earlier it was mentioned that there is an even better way to understand valuation. On Simply Wall St you can use Narratives, where you set a clear story for DLocal, link that story to specific forecasts for revenue, earnings and margins, and see a Fair Value that you can compare with the current price. The Community page already shows very different views, such as one Narrative with a Fair Value of about $14.50 and another above $190. Because these Narratives update as new news or earnings arrive, you can quickly see whether your own story for DLocal still holds up or needs a refresh.

Do you think there's more to the story for DLocal? Head over to our Community to see what others are saying!

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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