StoneCo (NasdaqGS:STNE) Valuation Check After Strong Fintech Growth and Divestment of Non-Core Operations

StoneCo (NasdaqGS:STNE) just reached a proposed settlement in its long running U.S. securities class action, a legal overhang that has loomed even as the Brazilian fintech story gained real traction. See our latest analysis for StoneCo. The proposed settlement lands after a powerful run, with the year to date share price return near 88% but more recent 30 day and 90 day share price returns turning negative, suggesting momentum is pausing as the market reassesses risk and growth. If this legal overhang has you thinking about where growth and execution might line up next, it could be worth exploring fast growing stocks with high insider ownership. With the lawsuit risk fading, a double digit discount to analyst targets and solid earnings momentum suggest upside. However, after a near doubling from the lows, is StoneCo still mispriced or is the market already banking on future growth? Most Popular Narrative Narrative: 24.9% Undervalued With StoneCo last closing at $15.23 against a narrative fair value of $20.29, the gap points to meaningful upside if the assumptions hold. Cross-selling of end-to-end financial solutions (payments, digital banking, working capital credit) is increasing client engagement and wallet share, demonstrated by growing deposit balances (+36% year-over-year) and credit portfolio expansion (+25% sequentially), supporting higher recurring revenue and long-term net earnings improvement. Read the complete narrative. Want to see the earnings engine behind that upside gap? The narrative leans on rapid profit growth, richer margins, and a surprisingly low future earnings multiple. Curious which assumptions really move the fair value dial? Result: Fair Value of $20.29 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, slower payment volume growth and rising credit loss provisions could quickly challenge the bullish buyback and margin expansion narrative if conditions deteriorate. Find out about the key risks to this StoneCo narrative. Build Your Own StoneCo Narrative If you see the story differently or want to dig into the numbers yourself, you can build a custom view in minutes: Do it your way. A great starting point for your StoneCo research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision. Looking for more investment ideas before you act? Do not stop at a single stock when the market is full of opportunities. Use the Simply Wall Street Screener to uncover focused, data driven ideas right now. Capture potential mispricings by running these 904 undervalued stocks based on cash flows to highlight companies trading below their estimated cash flow value. Tap into structural growth by scanning these 25 AI penny stocks to find businesses that are building the infrastructure and software behind the AI economy. Strengthen your income strategy with these 12 dividend stocks with yields > 3% to identify stocks that feature reliable payouts above 3 percent and solid fundamentals. 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.Mobile Infrastructure for Defense and DisasterThe next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.Get the investor briefing before the next round of contractsSponsored On Behalf of CiTech