XP Inc. (NasdaqGS:XP) Valuation in Focus Following Strong Earnings and Growth in Retail Cross-Selling

XP (NasdaqGS:XP) delivered another quarter highlighted by strong execution, as the company reported year-over-year growth in adjusted net income and revenue. Momentum accelerated in retail, particularly through increased adoption of its fee-based model and growing cross-selling activity.

See our latest analysis for XP.

XP’s momentum this year is easy to spot. After announcing strong quarterly earnings, completing a sizable buyback, and declaring a fresh dividend, the stock’s share price return has climbed 61.6% year-to-date. Over the past year, the 48.2% total shareholder return confirms that the positive business execution is translating into real value for investors as the company builds on recent initiatives.

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With such robust performance and a string of positive catalysts, investors may wonder if XP’s current valuation still offers upside. Alternatively, they may question whether the recent gains have already captured the company’s future growth prospects.

Most Popular Narrative: 17.7% Undervalued

With XP’s most popular narrative setting a fair value above the current $19.09 share price, the consensus suggests there is room for upside as optimism outpaces modest revenue forecast tweaks. This narrative considers stable earnings and resilient fundamentals alongside cautious top-line growth assumptions.

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 what is powering this bullish outlook? The fair value calculation is based on long-term projections for earnings and profit margins that may surprise you. Get the entire story from the assumptions behind this positive price target and see what else is fueling analyst conviction.

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 or weaker-than-expected Q3 results could weigh on growth and challenge XP’s positive outlook in the months ahead.

Find out about the key risks to this XP narrative.

Build Your Own XP Narrative

If you’re interested in building your own perspective or want to dig into the numbers yourself, you can easily craft your own narrative in just a few minutes with Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding XP.

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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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