OTCPK:CIOX.Y

Stock Analysis Report

Executive Summary

Cielo S.A., through its subsidiaries, provides payment services in Brazil.

Rewards

PE ratio (8.7x) is below the US market (18.9x)

Risk Analysis

Earnings are forecast to decline by an average of -5.2% per year for the next 3 years

Debt is not well covered by operating cash flow

High level of non-cash earnings

Unstable dividend track record

+ 1 more risk


Snowflake Analysis

Fair value with mediocre balance sheet.


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PagSeguro Digital

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Share Price & News

How has Cielo's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CIOX.Y has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.7%

CIOX.Y

2.6%

US IT

1.2%

US Market


1 Year Return

-37.8%

CIOX.Y

41.9%

US IT

24.2%

US Market

Return vs Industry: CIOX.Y underperformed the US IT industry which returned 39.9% over the past year.

Return vs Market: CIOX.Y underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

CIOX.YIndustryMarket
7 Day-3.7%2.6%1.2%
30 Day-15.8%6.3%3.5%
90 Day-7.6%17.4%11.7%
1 Year-35.1%-37.8%43.3%41.9%26.9%24.2%
3 Year-70.8%-75.1%109.6%100.7%53.0%43.2%
5 Year-76.2%-80.3%156.2%133.4%75.3%56.0%

Price Volatility Vs. Market

How volatile is Cielo's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Cielo undervalued compared to its fair value and its price relative to the market?

8.4x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: CIOX.Y ($1.78) is trading above our estimate of fair value ($0.74)

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


Price To Earnings Ratio

PE vs Industry: CIOX.Y is good value based on its PE Ratio (8.7x) compared to the IT industry average (32x).

PE vs Market: CIOX.Y is good value based on its PE Ratio (8.7x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: CIOX.Y's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: CIOX.Y is good value based on its PB Ratio (2.2x) compared to the US IT industry average (4.2x).


Next Steps

Future Growth

How is Cielo forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

-5.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CIOX.Y's earnings are forecast to decline over the next 3 years (-5.2% per year).

Earnings vs Market: CIOX.Y's earnings are forecast to decline over the next 3 years (-5.2% per year).

High Growth Earnings: CIOX.Y's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CIOX.Y's revenue (1.6% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: CIOX.Y's revenue (1.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CIOX.Y's Return on Equity is forecast to be low in 3 years time (11.5%).


Next Steps

Past Performance

How has Cielo performed over the past 5 years?

-2.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CIOX.Y has a high level of non-cash earnings.

Growing Profit Margin: CIOX.Y's current net profit margins (20.2%) are lower than last year (29.2%).


Past Earnings Growth Analysis

Earnings Trend: CIOX.Y's earnings have declined by -2.1% per year over the past 5 years.

Accelerating Growth: CIOX.Y's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CIOX.Y had negative earnings growth (-32.9%) over the past year, making it difficult to compare to the IT industry average (16.2%).


Return on Equity

High ROE: CIOX.Y's Return on Equity (19.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Cielo's financial position?


Financial Position Analysis

Short Term Liabilities: CIOX.Y's short term assets (R$72.5B) exceed its short term liabilities (R$63.6B).

Long Term Liabilities: CIOX.Y's short term assets (R$72.5B) exceed its long term liabilities (R$10.5B).


Debt to Equity History and Analysis

Debt Level: CIOX.Y's debt to equity ratio (91.1%) is considered high.

Reducing Debt: CIOX.Y's debt to equity ratio has increased from 64.6% to 91.1% over the past 5 years.

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

Interest Coverage: CIOX.Y's interest payments on its debt are well covered by EBIT (6.2x coverage).


Balance Sheet

Inventory Level: CIOX.Y has a low level of unsold assets or inventory.

Debt Coverage by Assets: CIOX.Y's debt is covered by short term assets (assets are 6.1x debt).


Next Steps

Dividend

What is Cielo's current dividend yield, its reliability and sustainability?

2.63%

Current Dividend Yield


Dividend Yield vs Market

company2.6%marketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years3.5%

Current dividend yield vs market & industry

Notable Dividend: CIOX.Y's dividend (2.53%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: CIOX.Y's dividend (2.53%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: CIOX.Y's dividend payments have been volatile in the past 10 years.

Growing Dividend: CIOX.Y's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (22.1%), CIOX.Y's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CIOX.Y's dividends in 3 years are forecast to be well covered by earnings (49% payout ratio).


Next Steps

Management

What is the CEO of Cielo's salary, the management and board of directors tenure and is there insider trading?

1.0yrs

Average management tenure


CEO

Paulo Caffarelli (54yo)

1.2yrs

Tenure

0

Mr. Paulo Rogério Caffarelli, also known as Rog, has been the Chief Executive Officer at Cielo SA since November 05, 2018. Mr. Caffarelli had been the President of the Board of Banco do Brasil S.A. since M ...


Management Age and Tenure

1.0yrs

Average Tenure

52yo

Average Age

Experienced Management: CIOX.Y's management team is not considered experienced ( 1 years average tenure), which suggests a new team.


Board Age and Tenure

1.9yrs

Average Tenure

53.5yo

Average Age

Experienced Board: CIOX.Y's board of directors are not considered experienced ( 1.9 years average tenure), which suggests a new board.


Insider Trading

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


Ownership Breakdown

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


Management Team

  • Paulo Caffarelli (54yo)

    Chief Executive Officer

    • Tenure: 1.2yrs
  • Renata De Paiva Greco (49yo)

    Executive VP - Commercial Large Accounts & Member of the Board of Executive Officers

    • Carlos César Righetti (52yo)

      Logistics Officer

      • Danilo Caffaro (36yo)

        Executive VP - Products & Business and Member of the Board of Executive Officers

        • Jean Leroy (55yo)

          Head of Investor Relations

          • Sérgio Saraiva Castelo de Pontes

            Executive VP of Organizational Development and Member of the Board of Executive Officers

            • Tenure: 2.4yrs
          • Gustavo Henrique de Sousa

            Executive VP of Finance & Investor Relations Officer

            • Tenure: 0.8yrs
          • Gabriel Mariotto

            Head of Business Analytics

            • Danilo Ricardo Zimmermann

              Member of the Board of Executive Officers

              • Thiago Stanger

                Head of Treasury Department

                • Tenure: 0.3yrs

              Board Members

              • Aldo Mendes (61yo)

                Independent Director

                • Tenure: 1.9yrs
              • Gilberto Mifano (70yo)

                Independent Director

                • Tenure: 9.8yrs
              • Francisco da Costa e Silva (71yo)

                Independent Director

                • Tenure: 10.6yrs
              • Marcelo de Araújo Noronha (54yo)

                Chairman of the Board

                • Tenure: 1.7yrs
              • Francisco José Terra (49yo)

                Director

                • Tenure: 1.8yrs
              • Marcelo Dall’Occo (53yo)

                Chairman of Fiscal Council

                • Tenure: 3.8yrs
              • Vinícius Favarão (44yo)

                Director

                • Tenure: 2.6yrs
              • Marcelo de Toniolo

                Director

                • Tenure: 1yrs
              • Artur Omuro

                Director

                • Tenure: 1yrs
              • Mauro Neto (31yo)

                Director

                • Tenure: 0.4yrs

              Company Information

              Cielo S.A.'s company bio, employee growth, exchange listings and data sources


              Key Information

              • Name: Cielo S.A.
              • Ticker: CIOX.Y
              • Exchange: OTCPK
              • Founded: 1995
              • Industry: Data Processing and Outsourced Services
              • Sector: Software
              • Market Cap: R$19.125b
              • Listing Market Cap: R$4.573b
              • Shares outstanding: 2.71b
              • Website: https://www.cielo.com.br

              Location

              • Cielo S.A.
              • Alameda Xingu, 512
              • Alphaville
              • Barueri
              • São Paulo
              • 06455-030
              • Brazil

              Listings

              TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
              CIEL3BOVESPA (Bolsa de Valores de Sao Paulo)YesCommon SharesBRBRLJun 2009
              CIOX.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDMar 2010

              Biography

              Cielo S.A., through its subsidiaries, provides payment services in Brazil. The company is involved in the provision of services related to credit and debit cards, and other payment methods, including signing up of merchants and service providers; rental, installation, and maintenance of point of sale terminals; and data capture and processing of electronic and manual transactions. It also offers services related in the processing means of payments that involve cards, maintenance services, and contacts with merchants for acceptance of credit and debit cards; data transmission services to load fixed or mobile phone credits; software development and licensing of computer programs; electronic transactions processing; IT services for collection and management of accounts payable and receivable; and data processing services and support services to medical companies. The company was formerly known as Companhia Brasileira de Meios de Pagamento and changed its name to Cielo S.A. in December 2009. Cielo S.A. was founded in 1995 and is headquartered in Barueri, Brazil. 


              Company Analysis and Financial Data Status

              All financial data provided by Standard & Poor's Capital IQ.
              DataLast Updated (UTC time)
              Company Analysis2020/01/21 00:26
              End of Day Share Price2020/01/17 00:00
              Earnings2019/09/30
              Annual Earnings2018/12/31


              Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.