XP (NasdaqGS:XP) - Share price, News & Analysis

Q: What is the Fair Price of XP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

XP ($23.66) is trading above our estimate of [[fair value]] ($18.32)

XP fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	5/6
Past Performance	5/6
Financial Health	3/6
Dividends	0/6

XP Stock Overview

XP Inc. provides financial products and services in Brazil.

Rewards

Price-To-Earnings ratio (18.3x) is below the Capital Markets industry average (30.7x)

Earnings are forecast to grow 19.59% per year

Earnings grew by 53.7% over the past year

Risk Analysis

No risks detected for XP from our risk checks.

XP Competitors

LPL Financial Holdings

NasdaqGS:LPLA

US$18.2b

Raymond James Financial

NYSE:RJF

US$22.4b

Jefferies Financial Group

NYSE:JEF

US$7.7b

Interactive Brokers Group

NasdaqGS:IBKR

US$25.7b

Price History & Performance

Summary of all time highs, changes and price drops for XP
Historical stock prices
Current Share Price	US$23.66
52 Week High	US$53.08
52 Week Low	US$16.97
Beta	1.7
1 Month Change	27.96%
3 Month Change	30.79%
1 Year Change	-51.71%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	-31.34%

Recent News & Updates

Aug 09

XP reports Q2 results

XP press release (NASDAQ:XP): Q2 Adjusted net income grew 1%, from R$1,034M in 2Q21 to R$1,046M in 2Q22. Adjusted net margin decreased 375 bps in 2Q21 to 30.5% in 2Q22, above the top of medium-term guidance of 30%. Revenue of R$3.43B (+13.6% Y/Y). Total gross revenue grew 13% from R$3.2B in 2Q21 to R$3.6B in 2Q22. Adjusted EBITDA decreased 2% from R$1,245M in 2Q21 to R$1,215M.

Jul 15

XP reports 16% growth in active clients and 4% in AUC for Q2

In its Q2 KPI's update, XP (NASDAQ:XP) reported total assets under custody of R$846B as of Jun.30 (+4% Y/Y, -3% Q/Q); Y/Y growth was driven by R$174B of net inflows and R$146B of market depreciation. On an adjusted basis, total monthly net inflows were R$14.3B in Q2 +44% Q/Q and total adjusted net inflows in Q2 were R$43B (-7% Q/Q). In Q2, active clients grew 16% and 4% in Q2 Y/Y and Q1, respectively totaling 3.6M; IFA Network reached 11.3K IFAs in 2Q22, up 5% Q/Q and 26% Y/Y. Retail DATs totaled 2.3M in Q2, a -15% Y/Y and flat Q/Q. Total TPV reached R$5.5B in Q2, vs. R$2.1B and R$4.5B in 2Q21 and 1Q22, respectively. Total active cards surpassed 383K in Q2, a growth of 25% Q/Q and 185% Y/Y. As of Jun.30, credit portfolio reached R$12.9B (+12% Q/Q, +90% Y/Y).

Shareholder Returns

	XP	US Capital Markets	US Market
7D	7.9%	1.9%	1.1%
1Y	-51.7%	-17.6%	-13.0%

Return vs Industry: XP underperformed the US Capital Markets industry which returned -17.6% over the past year.

Return vs Market: XP underperformed the US Market which returned -13% over the past year.

Price Volatility

Is XP's price volatile compared to industry and market?
XP volatility
XP Average Weekly Movement	8.7%
Capital Markets Industry Average Movement	0.5%
Market Average Movement	7.9%
10% most volatile stocks in US Market	17.1%
10% least volatile stocks in US Market	3.2%

Stable Share Price: XP is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: XP's weekly volatility (9%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2001	n/a	Thiago Maffra	https://www.xpinc.com

XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers Xpeed, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services.

XP Fundamentals Summary

How do XP's earnings and revenue compare to its market cap?
XP fundamental statistics
Market Cap	R$67.99b
Earnings (TTM)	R$3.71b
Revenue (TTM)	R$12.40b

18.3x

P/E Ratio

5.5x

P/S Ratio

Is XP overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
XP income statement (TTM)
Revenue	R$12.40b
Cost of Revenue	R$3.46b
Gross Profit	R$8.94b
Other Expenses	R$5.23b
Earnings	R$3.71b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 09, 2022

Earnings per share (EPS)	6.63
Gross Margin	72.11%
Net Profit Margin	29.93%
Debt/Equity Ratio	440.8%

How did XP perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is XP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for XP?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for XP. This is calculated by dividing XP's market cap by their current preferred multiple.
What is XP's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	R$67.99b

XP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	0.9x

Price to Earnings Ratio vs Peers

How does XP's PE Ratio compare to its peers?

XP PE Ratio vs Peers

The above table shows the PE ratio for XP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	20.6x
LPLA LPL Financial Holdings	36x	18.6%	US$18.2b
RJF Raymond James Financial	15x	16.3%	US$22.4b
JEF Jefferies Financial Group	6.6x	-14.2%	US$7.7b
IBKR Interactive Brokers Group	24.7x	20.0%	US$25.7b
XP XP	18.3x	19.6%	US$13.2b

Price-To-Earnings vs Peers: XP is good value based on its Price-To-Earnings Ratio (18.3x) compared to the peer average (20.6x).

Price to Earnings Ratio vs Industry

How does XP's PE Ratio compare vs other companies in the US Capital Markets Industry?

Price-To-Earnings vs Industry: XP is good value based on its Price-To-Earnings Ratio (18.3x) compared to the US Capital Markets industry average (30.7x)

Price to Earnings Ratio vs Fair Ratio

What is XP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

XP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	18.3x
Fair PE Ratio	16.6x

Price-To-Earnings vs Fair Ratio: XP is expensive based on its Price-To-Earnings Ratio (18.3x) compared to the estimated Fair Price-To-Earnings Ratio (16.6x).

Share Price vs Fair Value

What is the Fair Price of XP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: XP ($23.66) is trading above our estimate of fair value ($18.32)

Significantly Below Fair Value: XP is trading above our estimate of fair value.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is XP forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

19.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: XP's forecast earnings growth (19.6% per year) is above the savings rate (1.9%).

Earnings vs Market: XP's earnings (19.6% per year) are forecast to grow faster than the US market (14.6% per year).

High Growth Earnings: XP's earnings are forecast to grow, but not significantly.

Revenue vs Market: XP's revenue (24.6% per year) is forecast to grow faster than the US market (7.9% per year).

High Growth Revenue: XP's revenue (24.6% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: XP's Return on Equity is forecast to be high in 3 years time (22.6%)

Discover growth companies

Past Performance

How has XP performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

45.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: XP has high quality earnings.

Growing Profit Margin: XP's current net profit margins (29.9%) are higher than last year (26.8%).

Past Earnings Growth Analysis

Earnings Trend: XP's earnings have grown significantly by 45.6% per year over the past 5 years.

Accelerating Growth: XP's earnings growth over the past year (53.7%) exceeds its 5-year average (45.6% per year).

Earnings vs Industry: XP earnings growth over the past year (53.7%) exceeded the Capital Markets industry 53.7%.

Return on Equity

High ROE: Whilst XP's Return on Equity (23.89%) is high, this metric is skewed due to their high level of debt.

Discover strong past performing companies

Financial Health

How is XP's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: XP's short term assets (R$113.6B) exceed its short term liabilities (R$79.5B).

Long Term Liabilities: XP's short term assets (R$113.6B) exceed its long term liabilities (R$68.1B).

Debt to Equity History and Analysis

Debt Level: XP has more cash than its total debt.

Reducing Debt: XP's debt to equity ratio has increased from 140.3% to 440.8% over the past 5 years.

Debt Coverage: XP's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: Insufficient data to determine if XP's interest payments on its debt are well covered by EBIT.

Balance Sheet

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Dividend

What is XP current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.38%

Forecast Dividend Yield

Dividend Yield vs Market

Notable Dividend: Unable to evaluate XP's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate XP's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if XP's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if XP's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as XP has not reported any payouts.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.7yrs

Average management tenure

CEO

Thiago Maffra (37 yo)

1.25yrs

Tenure

Mr. Thiago Maffra serves as Chief Executive Officer at XP Inc. since May 12, 2021. He served as chief technology officer at XP Inc. since September 2018 to May 12, 2021. He served as Executive Director Of...

Leadership Team

Experienced Management: XP's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.

Board Members

Experienced Board: XP's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/09 00:00
End of Day Share Price	2022/08/09 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31