XP Inc. (XP) | Investment Case

1. Company Snapshot

1.a. Company Description

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.In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, private equity, structured products, credit cards, loan operations, life insurance, pension plans, real-estate investment funds, and others.The company was founded in 2001 and is based in São Paulo, Brazil.

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1.b. Last Insights on XP

XP Inc.'s recent performance was positively driven by robust asset growth of 17% YoY, record profits, and strong operational efficiency. The company's shift towards a more client-aligned, fee-based advisory model and investments in technology and marketing are expected to drive future growth. A new investor has taken a position in XP, purchasing 320,053 shares valued at $6.01 million. Additionally, XP's Q2 earnings matched estimates, with quarterly earnings of $0.43 per share. Its efficiency and scalability are highlighted by record net income and climbing AUM.

1.c. Company Highlights

Last Price	17.88
Change Percentage	-9.92%
Open	19.85
Previous Close	19.85
Market Cap ( Millions)	9400
Volume	18728618
Year High	20.64
Year Low	10.82
M A 50	17.94
M A 200	17.28

FCF Yield	34.92%
Dividend Yield	3.64%
ROE	23.23%
Debt / Equity	306.40%
Net Debt / EBIDTA	982.65%
Price To Book	2.17
Price Earnings Ratio	10.17
Price To FCF	2.86
Price To sales	6.9
EV / EBITDA	18.22

2. XP's Q2 Earnings: Strong Performance Amidst Challenging Macro Scenario

XP reported a strong second quarter, with a 17% growth in client assets, reaching BRL 1.9 trillion, and a 4% growth in gross revenues, reaching BRL 4.7 billion. Net income reached a record high of BRL 1.321 billion, representing an 18% year-over-year growth. The company's ROE expanded by 223 basis points, reaching 24.4%. These impressive results were driven by the company's fully integrated ecosystem, which generates investment opportunities across retail, institutional, and corporate divisions.

Publication Date: Aug -19

                                    📋 Highlights
                                    Record Net Income:
                                                Net income reached BRL 1.321 billion, up 18% YoY.
ROE Expansion:
                                                Return on equity (ROE) increased 223 bps to 24.4%.
Capital Management:
                                                Capital ratio at 20.1%; BRL 1 billion share buyback program announced.
Expense Efficiency:
                                                Efficiency ratio improved to 34.5%, driven by disciplined cost control.
Retail Growth Target:
                                                Confident in BRL 20 billion quarterly retail net new money amid macro challenges.

                                

Financial Performance

The company's financial performance was characterized by a 4% increase in total gross revenues, driven by retail growth. XP's expense discipline supported an efficiency ratio of 34.5%. EBT reached BRL 1.3 billion, with a 4% increase quarter-over-quarter. Net income grew 18% year-over-year, with a net margin expansion of 130 basis points. As Victor Mansur, CFO, highlighted, "We're focused on cost control and efficiency while investing in strategic areas."

Capital Management

XP's capital management strategy involves distributing dividends and executing share buybacks above 50% of net income for 2025 and 2026. The company has a share buyback program of BRL 1 billion to be executed until next year. This strategy demonstrates XP's commitment to returning value to shareholders.

Valuation

With a P/E Ratio of 10.05, XP's stock appears reasonably priced given its strong financial performance. The company's ROE of 22.91% and dividend yield of 4.06% also suggest that XP's earnings are likely to continue growing, making it an attractive investment opportunity.

3. NewsRoom

XP vs. SOFI: Which Stock Is the Better Value Option?

Dec -03

Source: zacks.com

Does XP Inc.A (XP) Have the Potential to Rally 32.21% as Wall Street Analysts Expect?

Nov -25

Source: zacks.com

XP Remains Attractive Despite Qualitative Concerns

Nov -24

Source: seekingalpha.com

XP Inc. Q3: Flows Recover, Advisory Scales Up, And Risk Perception Declines

Nov -18

Source: seekingalpha.com

XP Inc. (XP) Q3 2025 Earnings Call Transcript

Nov -18

Source: seekingalpha.com

XP Inc.A (XP) Meets Q3 Earnings Estimates

Nov -18

Source: zacks.com

XP Inc. Announces Cash Dividend, Treasury Shares Retirement and New Share Repurchase Program

Nov -17

Source: businesswire.com

XP Investor News: Rosen Law Firm Encourages XP Inc. Investors to Inquire About Securities Class Action Investigation – XP

Oct -30

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.30%)

6. Segments

Brokerage

Expected Growth: 15.3%

XP Inc.’s brokerage segment is poised to grow due to increasing demand for online brokerage services, rising adoption of digital investment products, and expanding financial inclusion in emerging markets.

7. Detailed Products

XP Investimentos

A platform that provides access to a wide range of financial products, including stocks, options, futures, and forex.

XP Clear

A digital platform that offers clearing and custody services for financial institutions and investors.

XP InvestPro

A professional trading platform that provides advanced tools and analytics for active traders.

XP Private

A wealth management platform that offers personalized investment advice and portfolio management services.

XP Educação

An online education platform that provides financial education and training programs.

8. XP Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

XP Inc. has a moderate threat of substitutes due to the presence of alternative digital payment methods, but its strong brand recognition and customer loyalty mitigate this threat.

Bargaining Power Of Customers

XP Inc.'s customers have limited bargaining power due to the company's dominant market position and lack of viable alternatives.

Bargaining Power Of Suppliers

XP Inc. has a moderate bargaining power of suppliers due to its dependence on a few key suppliers, but its strong relationships and contracts mitigate this risk.

Threat Of New Entrants

XP Inc. faces a high threat of new entrants due to the low barriers to entry in the digital payment industry and the attractiveness of the market.

Intensity Of Rivalry

XP Inc. operates in a highly competitive market with intense rivalry among existing players, which puts pressure on prices, innovation, and customer acquisition.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	76.01%
Debt Cost	3.95%
Equity Weight	23.99%
Equity Cost	12.42%
WACC	5.98%
Leverage	316.83%

11. Quality Control: XP Inc. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Morgan Stanley

A-Score: 6.3/10

Value: 5.0

Growth: 5.8

Quality: 5.8

Yield: 5.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

Schwab

A-Score: 6.2/10

Value: 4.4

Growth: 5.3

Quality: 8.1

Yield: 2.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

Raymond James Financial

A-Score: 6.1/10

Value: 4.2

Growth: 5.6

Quality: 8.1

Yield: 2.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

Goldman Sachs

A-Score: 6.0/10

Value: 5.2

Growth: 5.1

Quality: 4.9

Yield: 4.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

A-Score: 5.4/10

Value: 2.9

Growth: 6.6

Quality: 4.0

Yield: 6.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

A-Score: 5.0/10

Value: 0.8

Growth: 9.0

Quality: 7.6

Yield: 0.0

Momentum: 6.0

Volatility: 6.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-10.38%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.98%

XP Inc. - KYG982391099

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on XP

1.c. Company Highlights

Weak Momentum

Lower Quality

Average Yield

Earnings Miss

Revenues Beats

Average Growth

Average Quality

Earnings Beats

Revenues Miss

Stable Momentum

Fairly Valued

Medium Volatility

2. XP's Q2 Earnings: Strong Performance Amidst Challenging Macro Scenario

Financial Performance

Capital Management

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.30%)

6. Segments

Brokerage

Expected Growth: 15.3%

7. Detailed Products

XP Investimentos

XP Clear

XP InvestPro

XP Private

XP Educação

8. XP Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: XP Inc. passed 2 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.88$

Current Price

17.88$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA