A Look at XP Inc. (NasdaqGS:XP) Valuation After Strong Q3 Growth and Fresh Capital Returns

XP Inc. (NasdaqGS:XP) just released its third quarter results, showing year-over-year growth in both revenue and net income. The earnings came alongside news of a fresh share buyback and a new cash dividend. See our latest analysis for XP. XP’s share price has climbed 56% so far this year and currently sits at $18.45. This reflects renewed optimism after steady gains in revenue and a series of capital returns. Notably, its 1-year total shareholder return of nearly 24% signals meaningful progress for long-term investors. However, the five-year total return still trails well below its IPO level, highlighting the magnitude of its recent momentum. If XP’s buyback and dividend caught your attention, it could be worthwhile to expand your search and discover fast growing stocks with high insider ownership That leaves investors with a key question: is XP still undervalued despite these gains, or has the market already priced in its expected growth, leaving limited upside from here? Most Popular Narrative: 20.5% Undervalued With XP shares closing at $18.45, the most widely followed narrative suggests the fair value is over $23. This gap highlights a bullish mood, supported by optimism for ongoing fundamental resilience and future upside. Valuation models have been updated to reflect a longer-term perspective and now shift the horizon to year-end 2026, which supports higher target prices. XP shares are viewed as attractively valued. Long-term fundamentals are expected to remain resilient even amid near-term macroeconomic pressures. Read the complete narrative. Want to know which forecasts have analysts leaning bullish, even as near-term estimates cool? This fair value combines strong revenue gains and stable profit projections into an investment case that’s turning heads on Wall Street. Curious what makes these growth assumptions so audacious? Discover the narrative’s boldest financial drivers inside. Result: Fair Value of $23.20 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, persistent high interest rates and slowing corporate inflows could challenge XP’s growth trajectory. This may put pressure on future earnings potential. Find out about the key risks to this XP narrative. Build Your Own XP Narrative If you see the story differently, or want to dive in and do your own research, you can shape your own view in just a couple of minutes: Do it your way A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding XP. Ready to Find Even More Opportunities? Act on your investing ambitions now. The next big winner could already be on your radar, but only if you check out these proven strategies below. Uncover undervalued gems and position yourself ahead of the crowd with these 906 undervalued stocks based on cash flows. Catalyze your portfolio’s growth by targeting smart technology with these 27 AI penny stocks, making breakthroughs in AI and automation. Strengthen long-term returns and cash flow stability when you tap into these 18 dividend stocks with yields > 3%, offering high and reliable yields above 3%. 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.