StoneCo Company Overview
Zacks Rank #1 (Strong Buy) stock StoneCo (STNE) is a leading fintech company based in Brazil. The company runs a complete end-to-end cloud-based platform that allows retailers and businesses to accept electronic payments across storefronts and mobile and online channels. Investors can breakdown StoneCo’s business into three primary segments, including:
1. Payment Processing: STNE is the leading provider of point-of-sale payment processing services. Like Block (XYZ) (formerly Square) in the United States, STNE’s technology empowers businesses to accept credit cards, debit cards, and digital wallet payments through its point-of-sale payment solution.
2. Banking Services: StoneCo is much more than a payment processor. Small and medium-sized businesses can use STNE to bank, pay bills, and manage accounts. In addition, because STNE collects transaction data, the company can utilize that data to assess a client’s creditworthiness and offer loans.
3. Software Tools: Like Canadian e-commerce leader Shopify (SHOP), STNE offers a full suite of products that allow businesses to seamlessly conduct e-commerce transactions, analyze their client base, and manage customers.
StoneCo: Tapping into Brazil’s Digital Payment Growth
Stone allows investors to harness the growth of a largely untapped and rapidly growing Brazilian payments market. Brazil is the world’s ninth-largest economy and boasts the largest economy in Latin America, with more than $2 trillion in annual GDP. In Brazil, retail sales are growing, the middle class encompasses roughly 60% of the population, and the country is modernizing into a digital economy. Unlike the United States, Brazil’s digital payment economy is unsaturated, with roughly only 15% of consumers using digital payments currently. However, Statista predicts that, from 2025 to 2029, the Brazilian digital payment market will register a ~29% compound annual growth rate (CAGR) and grow from ~$300 billion to ~$900 billion.
STNE: A Consistent EPS Winner
StoneCO has consistently delivered EPS results above Wall Street expectations. The company has outpaced Zacks Consensus Estimates in twelve of the past thirteen quarters. Last quarter, despite a difficult and uncertain macroeconomic environment, STNE beat Wall Street’s top-and-bottom-line expectations. A positive EPS surprise of 21.88% last quarter suggests that STNE’s business is gaining momentum.
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StoneCo Offers Growth at a Reasonable Price
Despite a more than 15% earnings surge, STNE shares are cheap and trade at a forward P/E ratio of ~8x EPS.
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Bullish Trend Change
STNE’s technical picture echoes its bullish fundamentals. Following last quarter’s earnings results, shares bolted above the 200-day moving average and are breaking out of a multi-week base structure.
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Bottom Line
StoneCo’s comprehensive fintech platform, consistent earnings outperformance, and attractive valuation allow investors to profit from Brazil’s digital payment transformation.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
