StoneCo (NasdaqGS:STNE): Assessing Valuation After This Week’s Share Price Pullback

StoneCo (NasdaqGS:STNE) shares have moved a bit lower this week, drawing attention from investors looking for value. With this shift, many are curious about underlying trends and what the latest numbers might suggest.

See our latest analysis for StoneCo.

Despite sliding nearly 10% this week, StoneCo’s momentum over the past year is hard to ignore. The company has delivered a year-to-date share price return of almost 98% and a 72% total shareholder return for those staying the course. This pullback might just be a pause in an otherwise impressive run, as investors reassess the stock's risk and reward profile in light of recent gains.

If StoneCo's rebound has sparked your curiosity, now is the perfect moment to broaden your perspective and discover fast growing stocks with high insider ownership

With shares pulling back but annual gains still stacking up, the big question is whether StoneCo remains undervalued at these levels, or if the current price already reflects all of its future growth potential. Could this be another buying opportunity, or are investors simply late to the party?

Most Popular Narrative: 22% Undervalued

StoneCo's most-followed valuation narrative places its fair value noticeably higher than the recent close, highlighting a substantial discount investors are seeing. Market participants appear to be weighing both operational improvements and aggressive capital allocation as potential levers for further upside.

Cross-selling of end-to-end financial solutions (payments, digital banking, working capital credit) is increasing client engagement and wallet share. This is 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.

Curious what bold projections are behind this wide mismatch between price and narrative value? There is a future profit margin that would surprise even seasoned investors and a forward multiple that bucks industry norms. Want to know the financial formula that justifies the premium? Find out what’s driving this target price and why analysts are seeing hidden upside.

Result: Fair Value of $20.57 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, a slower pace of buybacks or tougher competition could challenge StoneCo’s bullish outlook and make its current valuation less compelling.

Find out about the key risks to this StoneCo narrative.

Build Your Own StoneCo Narrative

If you see things differently or want to dig into the figures on your own terms, it's easy to put together your own view in just a few 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.

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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.

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