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FinTech Boom Sets StoneCo on Profit Path: Time to Buy the Stock?
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StoneCo Ltd. (STNE - Free Report) shares have skyrocketed roughly 68.5% year to date, outpacing the broader Internet–Software industry and the S&P 500 benchmark, which have improved by about 7.3% and 1.2%, respectively. This stellar performance has been driven by three consecutive quarters of earnings beats. In the last reported quarter, the company’s adjusted earnings per share were 34 cents, 6.3% ahead of the Zacks Consensus Estimate.
This financial technology solutions company’s strategic repricing initiatives and capital return programs, including over R$2.4 billion in share buybacks over the past year, have bolstered investor confidence in the stock.
Image Source: Zacks Investment Research
Year to date, StoneCo has also strongly outperformed other fintech companies like PagSeguro Digital (PAGS - Free Report) and DLocal Limited (DLO - Free Report) . PagSeguro Digital, offering digital payment solutions and financial services to small and medium-sized businesses, has gained 44.4% and DLocal, a cross border digital payment solutions company, has gained 4.7% during this period.
YTD Share Comparison
Image Source: Zacks Investment Research
As of the latest trading session, the stock closed at $13.42, 11.9% below its 52-week high of $15.23.
Despite a choppy macroeconomic backdrop, 2025 is proving to be a pivotal year for StoneCo, highlighting its transformation into a more profit-focused fintech company.
STNE's Growth to Profitability
Strategic Repricing Initiatives Driving Profitability: StoneCo’s repricing strategy, implemented to balance growth with profitability, has already started yielding results. Financial Services revenues grew 20% year over year in the first quarter of 2025, accelerating from 11% in the fourth quarter. While some volume deceleration is expected, the focus on margin-rich transactions bodes well for sustainable earnings expansion.
Software Segment Gaining Operating Efficiency: StoneCo’s Software segment, although smaller than its Financial Services segment, contributed meaningfully to profitability with 11% revenue growth, driven by higher recurring subscriptions and an expanding client base. This led to a 12% increase in adjusted EBITDA and modest margin expansion in the first quarter. Additionally, Software CapEx has reduced from 71% of EBITDA in the first quarter of 2024 to 51% in the last-reported quarter, contributing to stronger cash conversion in the Software business.
Strong Capital Returns and Improving ROE: The company repurchased R$843 million in shares in the first quarter of 2025, totaling R$2.4 billion over the past year. These buybacks, alongside higher profits, have pushed return on equity (ROE) for the Financial Services segment to 27%, up from 23% a year ago.
STNE Stock Above SMAs
STNE stock is also trading significantly above both its 50-day and 200-day moving averages since April 9, 2025. The stock is also enjoying a golden crossover support as its 50-day moving average has been ahead of the 200-day moving average since April 30. This, while indicating the possibility of a further bullish shift in the stock's price, is generating strong optimism among investors.
STNE Stock Above 50 & 200-Day SMA & Golden Crossover
Image Source: Zacks Investment Research
STNE Trading Cheap
STNE stock’s Value Score of B suggests a discounted valuation at this moment.
This is evident from the price/earnings ratio. StoneCo shares currently trade at 8.84X forward earnings, well off its five-year high of 87.87X and below its median of 21.42X. The stock is also trading significantly below the industry’s price/earnings ratio of 37.72. The stock is also trading below DLocal’s 17.98X forward earnings. PagSeguro Digital, meanwhile, trades at 6.92X.
Image Source: Zacks Investment Research
Final Take on STNE
StoneCo is strengthening its position in the evolving fintech landscape and is well-positioned to capitalize on broader industry tailwinds. The global fintech market is projected to witness a robust CAGR of 16.2% from 2025 to 2032. Given its robust earnings growth and improving profitability across both Financial Services and Software segments, StoneCo stands out as a compelling investment in this niche. This Zacks Rank #1 (Strong Buy) company’s repricing strategy, expanding client base, rising ROE and enhanced capital efficiency signal strong momentum ahead. With a disciplined share buyback trend, StoneCo is effectively creating long-term shareholder value.
Image: Bigstock
FinTech Boom Sets StoneCo on Profit Path: Time to Buy the Stock?
StoneCo Ltd. (STNE - Free Report) shares have skyrocketed roughly 68.5% year to date, outpacing the broader Internet–Software industry and the S&P 500 benchmark, which have improved by about 7.3% and 1.2%, respectively. This stellar performance has been driven by three consecutive quarters of earnings beats. In the last reported quarter, the company’s adjusted earnings per share were 34 cents, 6.3% ahead of the Zacks Consensus Estimate.
This financial technology solutions company’s strategic repricing initiatives and capital return programs, including over R$2.4 billion in share buybacks over the past year, have bolstered investor confidence in the stock.
Image Source: Zacks Investment Research
Year to date, StoneCo has also strongly outperformed other fintech companies like PagSeguro Digital (PAGS - Free Report) and DLocal Limited (DLO - Free Report) . PagSeguro Digital, offering digital payment solutions and financial services to small and medium-sized businesses, has gained 44.4% and DLocal, a cross border digital payment solutions company, has gained 4.7% during this period.
YTD Share Comparison
Image Source: Zacks Investment Research
As of the latest trading session, the stock closed at $13.42, 11.9% below its 52-week high of $15.23.
Despite a choppy macroeconomic backdrop, 2025 is proving to be a pivotal year for StoneCo, highlighting its transformation into a more profit-focused fintech company.
STNE's Growth to Profitability
Strategic Repricing Initiatives Driving Profitability: StoneCo’s repricing strategy, implemented to balance growth with profitability, has already started yielding results. Financial Services revenues grew 20% year over year in the first quarter of 2025, accelerating from 11% in the fourth quarter. While some volume deceleration is expected, the focus on margin-rich transactions bodes well for sustainable earnings expansion.
Software Segment Gaining Operating Efficiency: StoneCo’s Software segment, although smaller than its Financial Services segment, contributed meaningfully to profitability with 11% revenue growth, driven by higher recurring subscriptions and an expanding client base. This led to a 12% increase in adjusted EBITDA and modest margin expansion in the first quarter. Additionally, Software CapEx has reduced from 71% of EBITDA in the first quarter of 2024 to 51% in the last-reported quarter, contributing to stronger cash conversion in the Software business.
Strong Capital Returns and Improving ROE: The company repurchased R$843 million in shares in the first quarter of 2025, totaling R$2.4 billion over the past year. These buybacks, alongside higher profits, have pushed return on equity (ROE) for the Financial Services segment to 27%, up from 23% a year ago.
STNE Stock Above SMAs
STNE stock is also trading significantly above both its 50-day and 200-day moving averages since April 9, 2025. The stock is also enjoying a golden crossover support as its 50-day moving average has been ahead of the 200-day moving average since April 30. This, while indicating the possibility of a further bullish shift in the stock's price, is generating strong optimism among investors.
STNE Stock Above 50 & 200-Day SMA & Golden Crossover
Image Source: Zacks Investment Research
STNE Trading Cheap
STNE stock’s Value Score of B suggests a discounted valuation at this moment.
This is evident from the price/earnings ratio. StoneCo shares currently trade at 8.84X forward earnings, well off its five-year high of 87.87X and below its median of 21.42X. The stock is also trading significantly below the industry’s price/earnings ratio of 37.72. The stock is also trading below DLocal’s 17.98X forward earnings. PagSeguro Digital, meanwhile, trades at 6.92X.
Image Source: Zacks Investment Research
Final Take on STNE
StoneCo is strengthening its position in the evolving fintech landscape and is well-positioned to capitalize on broader industry tailwinds. The global fintech market is projected to witness a robust CAGR of 16.2% from 2025 to 2032. Given its robust earnings growth and improving profitability across both Financial Services and Software segments, StoneCo stands out as a compelling investment in this niche. This Zacks Rank #1 (Strong Buy) company’s repricing strategy, expanding client base, rising ROE and enhanced capital efficiency signal strong momentum ahead. With a disciplined share buyback trend, StoneCo is effectively creating long-term shareholder value.
You can see the complete list of today’s Zacks #1 Rank stocks here.