StoneCo (NasdaqGS:STNE) Valuation Check After Strong Fintech Growth and Divestment of Non-Core Operations

StoneCo (NasdaqGS:STNE) just reached a proposed settlement in its long running U.S. securities class action, a legal overhang that has loomed even as the Brazilian fintech story gained real traction.

See our latest analysis for StoneCo.

The proposed settlement lands after a powerful run, with the year to date share price return near 88% but more recent 30 day and 90 day share price returns turning negative, suggesting momentum is pausing as the market reassesses risk and growth.

If this legal overhang has you thinking about where growth and execution might line up next, it could be worth exploring fast growing stocks with high insider ownership.

With the lawsuit risk fading, a double digit discount to analyst targets and solid earnings momentum suggest upside. However, after a near doubling from the lows, is StoneCo still mispriced or is the market already banking on future growth?

Most Popular Narrative Narrative: 24.9% Undervalued

With StoneCo last closing at $15.23 against a narrative fair value of $20.29, the gap points to meaningful upside if the assumptions hold.

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), supporting higher recurring revenue and long-term net earnings improvement.

Read the complete narrative.

Want to see the earnings engine behind that upside gap? The narrative leans on rapid profit growth, richer margins, and a surprisingly low future earnings multiple. Curious which assumptions really move the fair value dial?

Result: Fair Value of $20.29 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slower payment volume growth and rising credit loss provisions could quickly challenge the bullish buyback and margin expansion narrative if conditions deteriorate.

Find out about the key risks to this StoneCo narrative.

Build Your Own StoneCo Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your StoneCo research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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