StoneCo (NasdaqGS:STNE) Valuation: Assessing Opportunity After Recent Share Price Dip

StoneCo (NasdaqGS:STNE) shares have slipped nearly 5% over the past week, catching the eye of investors looking for opportunity among fintech companies. With shares down in the past month as well, questions around valuation are now front and center.

See our latest analysis for StoneCo.

Zooming out, StoneCo shares have cooled a bit after posting strong gains earlier this year. The fintech’s year-to-date share price return still stands at an impressive 110%. That momentum has been a standout, even as the 1-year total shareholder return of 52% points to healthy growth for longer-term investors. Volatility in recent weeks simply underscores shifting sentiment around the company’s outlook and valuation.

If you’re curious to see what else is capturing investor attention lately, now’s a great time to explore fast growing stocks with high insider ownership.

With StoneCo’s stock still trading below analyst targets despite recent run-ups, investors are debating whether the upbeat growth story has yet to be fully reflected or if the potential upside is already baked in. Could this be a real buying opportunity, or is the market already ahead of itself?

Most Popular Narrative: 10.7% Undervalued

StoneCo's narrative fair value stands at $19.08, compared to a recent closing price of $17.03. Based on the latest consensus, analysts appear to see more upside than the market currently prices in.

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.

Is this impressive fair value built on bold profit margin forecasts or fast-expanding client numbers? The real driver might surprise you. Crack open the narrative to see which key financial lever is behind that valuation and what the market could be missing.

Result: Fair Value of $19.08 (UNDERVALUED)

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

However, slower payment growth or mounting credit risk could challenge StoneCo’s profit expansion. This may make sustained strong results less certain in coming quarters.

Find out about the key risks to this StoneCo narrative.

Build Your Own StoneCo Narrative

If you have a different perspective or want to dig into the numbers yourself, it only takes a few minutes to build your own narrative. Why not Do it your way?

A great starting point for your StoneCo research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Investment Ideas?

Unlock your next big opportunity with these hand-picked stock ideas. Don't let the market's best-kept secrets slip by. Check out these unique angles today:

• Spot exceptional cash flow potential by reviewing these 881 undervalued stocks based on cash flows that may be overlooked by the broader market.
• Capture long-term growth and passive income by evaluating these 18 dividend stocks with yields > 3% offering robust yields above 3%.
• Tap into the digital currency trend by scanning these 79 cryptocurrency and blockchain stocks and see which companies are driving innovation in blockchain and crypto finance.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com