What's in the Offing for StoneCo (STNE) This Earnings Season?

StoneCo STNE is slated to release second-quarter 2024 results on Aug 14.
The consensus mark for earnings is pegged at 34 cents per share, down by a penny in the past 30 days. The company reported earnings of 19 cents in the year-ago quarter.

StoneCo beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average earnings surprise of 11.3%.

The consensus mark for revenues is pegged at $590.7 million, indicating a decline of 1.1% from the year-ago quarter.

Let’s see how things have shaped up for the upcoming announcement.

StoneCo Ltd. Price and EPS Surprise

StoneCo Ltd. price-eps-surprise | StoneCo Ltd. Quote

Factors to Note

StoneCo’s second-quarter performance is likely to have been affected by increased competition from banks moving downmarket to serve Small and Medium Enterprises. Moreover, other payment processors or fintech companies are putting more emphasis on credit products as the Brazilian policymakers have kept the interest rates at restrictive levels to counter the ongoing inflation.

StoneCo’s overall software business revenues are likely to have been affected by STNE’s registry business, TAG. Moreover, the implementation of STNE’s new accounting policy to spread the membership fee revenues throughout a member’s lifetime instead of realizing it at the time of payment is likely to have hurt the top line in the second quarter.

However, STNE’s robust solutions in the financial services segment, particularly its Micro, Small and Medium-sized Businesses offerings, are likely to have been a key growth driver. With above-industry Total Payment Volume growth and higher take rates, this segment is expected to have delivered robust financial results in the to-be-reported quarter.

Strengthening efforts in enhancing its banking solutions for small and medium-sized businesses, evident by the introduction of solutions like the Super Conta Ton and new payment feature in Ton, are expected to have contributed to banking revenues in the quarter to be reported.

StoneCo's credit offering has shown significant growth, reaching $532 million in the first quarter of 2024. With low non-performing loan ratios and plans to extend the credit offerings to more clients, STNE is expected to have benefited from the continued expansion of its credit portfolio in the to-be-reported quarter.

STNE’s increasing focus on implementing cost management approaches, such as shared-services centers and zero-based budgeting to boost profitability and operational efficiency, is likely to have driven significant operating leverage in the to-be-reported quarter.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

StoneCo has an Earnings ESP of -16.83% and a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some stocks that, according to our model, have the right combination of elements to beat on earnings this season.

Brinker International EAT has an Earnings ESP of +6.40% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Brinker International is set to report fourth-quarter fiscal 2024 results on Aug 14. The Zacks Consensus Estimate for EAT’s earnings is pegged at $1.65 per share, indicating growth of 18.7% from the year-ago quarter’s reported figure. Shares of EAT have returned 54.3% in the year-to-date period.

Abercrombie & Fitch ANF has an Earnings ESP of +5.40% and sports a Zacks Rank #1 at present.

Abercrombie & Fitch is slated to report its second-quarter 2024 results on Aug 28. The Zacks Consensus Estimate for ANF’s earnings is pegged at $2.13 per share, indicating a significant jump of 93.64% from the prior-year quarter’s reported figure. Shares of ANF have surged 66.5% in the year-to-date period.

Affirm AFRM has an Earnings ESP of +19.64% and a Zacks Rank #2 at present.

Affirm is scheduled to release fourth-quarter fiscal 2024 results on Aug 28.

The Zacks Consensus Estimate for AFRM’s loss is pegged at 45 cents per share, narrower than the prior-year quarter’s loss of 69 cents per share. Shares of AFRM have plunged 48.2% in the year-to-date period.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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