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1. Company Snapshot

1.a. Company Description

StoneCo Ltd.provides financial technology solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil.It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and technology and solutions to digital merchants through sales and technical personnel and software vendors, as well as sells solutions to brick-and-mortar and digital merchants through sales team.


As of December 31, 2021, the company served approximately 1,766,100 clients primarily small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors.StoneCo Ltd.was founded in 2000 and is headquartered in George Town, the Cayman Islands.


StoneCo Ltd.operates as a subsidiary of HR Holdings, LLC.

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1.b. Last Insights on STNE

StoneCo Ltd.'s recent performance was driven by strong fintech momentum, disciplined growth, and rising investor confidence, fueled by its strategic repricing initiatives and capital-return programs, including over R$2.4 billion in share buybacks over the past year. The company's full-stack platform and bold product innovation aimed at Brazil's booming digital payment market have also contributed to its growth. Additionally, StoneCo's 14% gross profit growth and 18% EPS growth targets in 2025, backed by repricing gains, cash sweep moves, and credit portfolio expansion, have bolstered investor confidence.

1.c. Company Highlights

2. StoneCo's Q3 2025 Earnings: A Strong Performance Amidst a Challenging Macro Environment

StoneCo reported a robust financial performance in the third quarter of 2025, with total revenue and income growing 16% year-over-year. Adjusted net income rose 18% year-over-year, driven by a successful adjustment to the pricing policy, strategic use of client deposits as a funding source, and a lower effective tax rate. Adjusted basic EPS reached BRL 2.57 per share, growing 31% year-over-year. The actual EPS came in at BRL 0.43, in line with analyst estimates. The company's ROE continued to expand sequentially, with consolidated ROE increasing 8 percentage points year-over-year to 24%.

Publication Date: Nov -10

📋 Highlights
  • Adjusted Gross Profit Growth:: Year-to-date adjusted gross profit rose 15.2%, with adjusted basic EPS reaching BRL 6.9/share (+37% YTD).
  • Shareholder Returns:: BRL 2.8 billion returned via buybacks in 12 months (10% yield), 74% of BRL 3 billion excess capital allocated to investors.
  • ROE Expansion:: Consolidated ROE increased 8 percentage points YoY to 24%, driven by improved pricing, client deposit funding, and lower tax rates.
  • Credit Growth Levers:: Credit to become a larger P&L contributor by 2026, with credit yields rising from 2.6% to 2.9% over the quarter.

Revenue Growth and Client Base Expansion

The active client base grew 17% year-over-year, reaching 4.7 million clients, with 38% classified as heavy users. This growth was a key driver of the company's revenue expansion, with total revenue and income growing 16% year-over-year. According to Lia de Matos, the company remains confident in its ability to continue evolving and growing consistently, with a focus on profitability and enhancing its value proposition to clients.

Cost Management and Efficiency Gains

The company has made significant progress in managing costs, with cost of services increasing 12% year-over-year, decreasing 90 basis points as a percentage of revenues. Administrative expenses increased 7% year-over-year, resulting in a reduction of 50 basis points as a percentage of revenues. The company has seen efficiency gains in logistics and customer service, driven by the adoption of AI and scale.

Valuation and Outlook

Analysts estimate next year's revenue growth at 5.2%. Using the current valuation metrics, the company's P/B Ratio stands at 2.08, and ROE is reported at -9.86%. For a financial services company like StoneCo, the Price-to-Tangible Book Value (P/TBV) would be a relevant metric, although it's not directly available. However, considering the P/B Ratio and the expected revenue growth, the stock appears to be reasonably valued. The company's guidance for 2027 is expected to be revisited, with a potential adjustment to the gross profit indicator to reflect only continuing operations.

Credit and Funding Costs

The company's credit business is expected to be a larger contributor to the overall P&L in 2026, with a gradual increase in yields from 2.6% to 2.9% over the quarter. Funding costs are sensitive to changes in interest rates, with a 100 basis point reduction in interest rates resulting in a BRL 200-250 million positive impact on pretax earnings. However, the company tends to pass on interest rate declines to clients, and there is a lag in doing so.

3. NewsRoom

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StoneCo Ltd. (NASDAQ:STNE) Receives Average Recommendation of “Moderate Buy” from Analysts

Dec -04

Source: defenseworld.net

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STNE or FFIV: Which Is the Better Value Stock Right Now?

Dec -01

Source: zacks.com

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Buy These 5 Best Value Stocks to Make the Most of P/B Ratio

Nov -28

Source: zacks.com

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4 Value Stocks to Buy After the Thanksgiving Market Surge

Nov -28

Source:

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Creative Planning Grows Stake in StoneCo Ltd. $STNE

Nov -27

Source: defenseworld.net

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StoneCo Will Need To Amp Up Returns To Shareholders To Avoid Over Capitalizing

Nov -23

Source: seekingalpha.com

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StoneCo: High-Growth Bargain With Double-Digit Buyback Yield

Nov -22

Source: seekingalpha.com

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Down 22.3% in 4 Weeks, Here's Why StoneCo (STNE) Looks Ripe for a Turnaround

Nov -21

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.49%)

6. Segments

Financial Services

Expected Growth: 12%

StoneCo Ltd's 12% growth in Financial Services is driven by increasing adoption of digital payment solutions, expansion into new markets, and strategic partnerships. Growing demand for online payment platforms, rising e-commerce transactions, and increasing financial inclusion in emerging markets also contribute to this growth.

Software

Expected Growth: 8%

StoneCo Ltd.'s software growth is driven by increasing adoption of digital payments in Brazil, rising e-commerce penetration, and growing demand for integrated payment solutions. Additionally, the company's expanding merchant base, strategic partnerships, and innovative products such as Stone Pagamentos and Stone Mais, contribute to its high growth rate.

Non Allocated

Expected Growth: 9%

StoneCo Ltd's 9% growth is driven by increasing adoption of digital payments in Brazil, expansion into new markets, and strategic partnerships. The company's innovative financial solutions, such as its payment processing platform, also contribute to growth. Additionally, StoneCo's focus on small and medium-sized businesses, a underserved market, provides a significant growth opportunity.

7. Detailed Products

StoneCo Payment Platform

A comprehensive payment platform that enables businesses to accept and process payments online and offline

StoneCo POS

A point-of-sale system that enables businesses to manage sales, inventory, and customer relationships

StoneCo TEF

A digital account that enables individuals and businesses to manage their finances, make payments, and transfer funds

StoneCo Hub

A digital platform that connects businesses with financial institutions, enabling them to access financial services

StoneCo Capital

A financial services platform that provides access to credit, insurance, and other financial products

8. StoneCo Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

StoneCo Ltd. operates in the financial technology industry, which is characterized by a moderate threat of substitutes. While there are alternative payment methods, StoneCo's innovative solutions and strong brand recognition mitigate the threat of substitutes.

Bargaining Power Of Customers

StoneCo Ltd. has a large customer base, but individual customers do not have significant bargaining power. The company's diversified customer base and strong brand reputation reduce the bargaining power of customers.

Bargaining Power Of Suppliers

StoneCo Ltd. has a diversified supplier base, which reduces the bargaining power of suppliers. The company's strong financial position and long-term contracts with suppliers also mitigate the bargaining power of suppliers.

Threat Of New Entrants

The financial technology industry is highly competitive, and new entrants can easily disrupt the market. StoneCo Ltd. needs to continuously innovate and invest in research and development to stay ahead of new entrants.

Intensity Of Rivalry

The financial technology industry is highly competitive, and StoneCo Ltd. faces intense rivalry from established players and new entrants. The company needs to focus on differentiating its products and services to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.88%
Debt Cost 15.51%
Equity Weight 73.12%
Equity Cost 15.81%
WACC 15.73%
Leverage 36.76%

11. Quality Control: StoneCo Ltd. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Amdocs

A-Score: 5.7/10

Value: 4.9

Growth: 4.9

Quality: 7.1

Yield: 4.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
F5

A-Score: 5.6/10

Value: 2.8

Growth: 4.8

Quality: 9.2

Yield: 0.0

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Qualys

A-Score: 5.5/10

Value: 2.3

Growth: 7.9

Quality: 9.2

Yield: 0.0

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
GoDaddy

A-Score: 4.6/10

Value: 3.1

Growth: 8.7

Quality: 6.8

Yield: 0.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
StoneCo

A-Score: 4.4/10

Value: 6.0

Growth: 4.1

Quality: 3.8

Yield: 0.0

Momentum: 8.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Varonis Systems

A-Score: 3.8/10

Value: 4.7

Growth: 6.9

Quality: 4.0

Yield: 0.0

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

14.68$

Current Price

14.68$

Potential

-0.00%

Expected Cash-Flows