StoneCo (STNE) experienced a notable increase in its stock price this week, attributed to quarterly results that surpassed expectations. The fintech company based in Brazil saw a 14.2% rise in its share price throughout the week’s trading, as reported by S&P Global Market Intelligence.
On Tuesday, after the market closed, StoneCo released its fourth-quarter results, exceeding Wall Street’s sales and earnings forecasts. The company reported sales of 3.61 billion Brazilian real (approximately $636 million), surpassing the average analyst estimate of 3.58 billion real (around $631 million). Non-GAAP (adjusted) earnings per share were reported at $0.40, exceeding the average analyst prediction by $0.06 per share.
StoneCo’s revenue saw an approximate 11% year-over-year increase in the fourth quarter, and adjusted earnings per share grew by about 47%. Sales growth during this period was driven by continued customer acquisitions and an increase in average revenue per user within the financial services unit. Total payment volumes for small and medium-sized business customers using StoneCo’s platform increased by 22% compared to the previous year, and the company continued to rapidly expand its credit business during the quarter.
Despite this week’s rally, StoneCo’s stock has decreased by roughly 34% over the past year. The company’s share price has faced challenges due to macroeconomic conditions in Brazil and some slowing in growth. However, the outlook for the fintech services provider may be improving.
As inflation begins to recede in Brazil, StoneCo may be positioned to achieve enhanced business results and improved stock performance. While macroeconomic factors remain a significant risk for StoneCo, the stock appears to be undervalued, trading at approximately eight times this year’s projected earnings.
