This week, StoneCo’s stock saw an impressive rise of 14.2%, attributed to the company’s strong quarterly performance that exceeded expectations. Based in Brazil, this fintech enterprise delighted investors by outperforming Wall Street’s forecasts for both sales and earnings, as reflected in data gathered by S&P Global Market Intelligence.
After the stock market closed on Tuesday, StoneCo released its fourth-quarter financial results. The company reported sales amounting to 3.61 billion Brazilian reais, or approximately $636 million, which surpassed the analysts’ average prediction of 3.58 billion reais, or about $631 million. Furthermore, the adjusted earnings per share (EPS) stood at $0.40, outpacing the forecast by $0.06 per share.
A Promising Q4 Boost for StoneCo Stock
In the fourth quarter, StoneCo’s revenue climbed about 11% compared to the same period last year, and the adjusted EPS soared by approximately 47%. The company capitalized on increased customer numbers and a higher average revenue per user in its financial services sector, which significantly contributed to sales growth. There was also a striking 22% rise in total payment volumes handled for small to medium-sized businesses via its platform over the previous year. Meanwhile, StoneCo continued to intensively expand its credit services.
What Lies Ahead for StoneCo?
Despite this week’s surge, StoneCo’s share value has decreased by about 34% over the past year. The company has been facing challenges due to Brazil’s wider economic pressures and a slowdown in growth. Yet, the future could start to look brighter for this fintech player.
As inflation shows signs of slowing down in Brazil, StoneCo might be in a better position to improve its business results and stock performance. While economic conditions still pose significant risks, StoneCo’s stock appears undervalued, trading at roughly eight times the projected earnings for this year.
