Will XP's (XP) Earnings Momentum Sustain Its Competitive Edge in Brazil's Fintech Market?

• XP Inc. announced its second quarter 2025 results on August 18, reporting revenue of R$4.46 billion and net income of R$1.32 billion, both higher than the prior year period.
• The company's results showed continuing earnings per share growth, with diluted EPS from continuing operations rising to R$2.46 compared to R$2.03 a year earlier.
• We will assess how XP Inc.'s continued growth in revenue and profit informs the broader investment narrative for the business.

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XP Investment Narrative Recap

To own XP Inc. stock, you need to believe the company can keep gaining retail market share as Brazilians invest more, offsetting pressure from incumbent banks and competitors. The latest quarterly results, showing continued growth in revenue and profit, are positive but do not fundamentally change the main near-term catalyst, sustained net new money inflows, or address the key risk of tightening margins if fee pressure rises further. Among recent announcements, the most relevant is XP's May 2025 launch of a new BRL 1,000 million share buyback program, signaling confidence in its ongoing profitability and financial flexibility. However, for this to matter long-term, growth in assets under custody and operating leverage from technology investments remain critical. Yet, despite strong headline numbers, investors should be aware that risks tied to intensifying competition and margin compression are far from resolved…

Read the full narrative on XP (it's free!)

XP's narrative projects R$25.8 billion revenue and R$6.8 billion earnings by 2028. This requires 15.3% yearly revenue growth and a R$1.9 billion earnings increase from R$4.9 billion.

Uncover how XP's forecasts yield a $22.23 fair value, a 37% upside to its current price.

Exploring Other Perspectives

Five fair value estimates from the Simply Wall St Community range from R$17.79 to R$22.23 per share, showing wide differences in expectations. While some anticipate future gains based on XP’s growing client base, others remain cautious about the impact of fee pressure on margins, reminding you to consider several viewpoints before forming your own outlook.

Explore 5 other fair value estimates on XP - why the stock might be worth just $17.79!

Build Your Own XP Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your XP research is our analysis highlighting 5 key rewards that could impact your investment decision.
• Our free XP research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate XP's overall financial health at a glance.

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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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