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Fintech Tailwind and Cheap Valuation Make StoneCo a Buy Today
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Key Takeaways
STNE surged 54.9% in 3 months, outpacing PagSeguro, DLocal and the broader software industry.
StoneCo's repricing strategy drove Q1 gross profit up 19% and EPS up 36%, beating annual growth targets.
STNE saw PIX transactions jump 95%, now monetized to boost deposits and reduce card reliance.
StoneCo Ltd. (STNE - Free Report) , a leading provider of financial technology solutions in Brazil, stands to benefit significantly from the global fintech market’s accelerating growth. As the market, valued at $340.10 billion in 2024, is projected to surpass $1.12 trillion by 2032 at a CAGR of 16.2% (Fortune Business Insights report), companies like StoneCo that offer digital payment processing and cloud-based financial services are poised for substantial growth.
The increasing adoption of cloud computing, AI-driven fraud detection and mobile-first financial services aligns closely with StoneCo’s business model. The surge in demand for real-time payments and secure digital transactions — trends especially prominent in emerging markets —further strengthens StoneCo’s strategic positioning across Latin America’s evolving digital economy.
In the past three months, StoneCo shares have skyrocketed roughly 54.9%, outpacing the broader Internet–Software industry and the S&P 500 benchmark, which have improved by about 4.3% and 2.4%, respectively. During this time, StoneCo has also outpaced key fintech peers such as PagSeguro Digital (PAGS - Free Report) and DLocal Limited (DLO - Free Report) . While PagSeguro, known for its digital payment and financial services tailored to small and mid-sized businesses, gained 30.9%, cross-border payment platform DLocal advanced 18.2%.
Three-Month Price Comparison
Image Source: Zacks Investment Research
Two Major Tailwinds Driving STNE Stock
Repricing Power Accelerates Profitability: StoneCo’s first-quarter 2025 results highlight the success of the strategic repricing initiatives, which helped drive gross profit by 19% year over year, well above its annual guidance of 14%. By adjusting prices across its client base in response to 2024’s yield curve spike, the company not only protected margins but also enhanced earnings per share by 36%, doubling the 18% growth pace projected for the full year.
Deposit Growth and Monetization of PIX Drive Financial Expansion: StoneCo continues to benefit from strong growth in its financial ecosystem. Client deposits rose 38% year over year to R$8.3 billion, with R$6.3 billion placed in time deposits under its cash sweep strategy, cutting funding costs and improving capital strength. Meanwhile, PIX transactions jumped 95% and are now monetized like debit payments. This helps offset declines in card usage, boosts deposit inflows, and supports future lending and efficiency.
Average Target Price for STNE Suggests an Upside
Based on short-term price targets offered by nine analysts, StoneCo is currently trading 11.6% below its average Zacks price target.
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 9.26X forward earnings, well off its five-year high of 87.87X and below its median of 21.13X. The stock is also trading significantly below the industry’s price/earnings ratio of 37.60. The stock is also trading below DLocal’s 16.4X forward earnings. PagSeguro Digital, meanwhile, trades at 6.96X.
Image Source: Zacks Investment Research
Why STNE Looks Like a Strong Buy Right Now
Given StoneCo’s robust first-quarter performance, disciplined repricing strategy and monetization of PIX transactions, the company is quite clearly executing well on both growth and profitability fronts. Coupled with its discounted valuation relative to peers and historical averages, STNE stands out as an attractive opportunity. With a Zacks Rank #1 (Strong Buy), now may be an opportune time for investors to capitalize on StoneCo’s momentum before the market fully prices in its upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Fintech Tailwind and Cheap Valuation Make StoneCo a Buy Today
Key Takeaways
StoneCo Ltd. (STNE - Free Report) , a leading provider of financial technology solutions in Brazil, stands to benefit significantly from the global fintech market’s accelerating growth. As the market, valued at $340.10 billion in 2024, is projected to surpass $1.12 trillion by 2032 at a CAGR of 16.2% (Fortune Business Insights report), companies like StoneCo that offer digital payment processing and cloud-based financial services are poised for substantial growth.
The increasing adoption of cloud computing, AI-driven fraud detection and mobile-first financial services aligns closely with StoneCo’s business model. The surge in demand for real-time payments and secure digital transactions — trends especially prominent in emerging markets —further strengthens StoneCo’s strategic positioning across Latin America’s evolving digital economy.
In the past three months, StoneCo shares have skyrocketed roughly 54.9%, outpacing the broader Internet–Software industry and the S&P 500 benchmark, which have improved by about 4.3% and 2.4%, respectively. During this time, StoneCo has also outpaced key fintech peers such as PagSeguro Digital (PAGS - Free Report) and DLocal Limited (DLO - Free Report) . While PagSeguro, known for its digital payment and financial services tailored to small and mid-sized businesses, gained 30.9%, cross-border payment platform DLocal advanced 18.2%.
Three-Month Price Comparison
Image Source: Zacks Investment Research
Two Major Tailwinds Driving STNE Stock
Repricing Power Accelerates Profitability: StoneCo’s first-quarter 2025 results highlight the success of the strategic repricing initiatives, which helped drive gross profit by 19% year over year, well above its annual guidance of 14%. By adjusting prices across its client base in response to 2024’s yield curve spike, the company not only protected margins but also enhanced earnings per share by 36%, doubling the 18% growth pace projected for the full year.
Deposit Growth and Monetization of PIX Drive Financial Expansion: StoneCo continues to benefit from strong growth in its financial ecosystem. Client deposits rose 38% year over year to R$8.3 billion, with R$6.3 billion placed in time deposits under its cash sweep strategy, cutting funding costs and improving capital strength. Meanwhile, PIX transactions jumped 95% and are now monetized like debit payments. This helps offset declines in card usage, boosts deposit inflows, and supports future lending and efficiency.
Average Target Price for STNE Suggests an Upside
Based on short-term price targets offered by nine analysts, StoneCo is currently trading 11.6% below its average Zacks price target.
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 9.26X forward earnings, well off its five-year high of 87.87X and below its median of 21.13X. The stock is also trading significantly below the industry’s price/earnings ratio of 37.60. The stock is also trading below DLocal’s 16.4X forward earnings. PagSeguro Digital, meanwhile, trades at 6.96X.
Image Source: Zacks Investment Research
Why STNE Looks Like a Strong Buy Right Now
Given StoneCo’s robust first-quarter performance, disciplined repricing strategy and monetization of PIX transactions, the company is quite clearly executing well on both growth and profitability fronts. Coupled with its discounted valuation relative to peers and historical averages, STNE stands out as an attractive opportunity. With a Zacks Rank #1 (Strong Buy), now may be an opportune time for investors to capitalize on StoneCo’s momentum before the market fully prices in its upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.