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StoneCo (STNE) to Report Q1 Earnings: What's in the Cards?

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StoneCo Ltd. (STNE - Free Report) is set to report first-quarter 2019 results on May 13.

In the last reported quarter, StoneCo’s earnings of 17 cents beat the Zacks Consensus Estimate by 4 cents.

StoneCo’s active client base increased 104.1% year over year to 267.9K. Additionally, the company’s take rate was 1.88%, up from 1.58% in the year-ago period.

StoneCo Ltd. Price and EPS Surprise

StoneCo Ltd. Price and EPS Surprise

StoneCo Ltd. price-eps-surprise | StoneCo Ltd. Quote

Management anticipates active client base and take rate to be in the range of 305.9K to 307.4K and 1.84% to 1.85%, respectively in the first quarter.

The Zacks Consensus Estimate for first-quarter earnings has remained stable at 16 cents over the past seven days.

Notably, the consensus mark for revenues is pegged at $115 million. Management anticipates total revenues and income in the range of R$530.0 million to R$533.0 million.

Let’s see how things are shaping up for the upcoming announcement.

Factors Likely to Influence Q1 Results

StoneCo’s strategy to add more features and capabilities to its platform to help its clients better manage business and enhance productivity is likely to boost its client base in first-quarter 2019.

Additionally, the company’s differentiated services may help it lure small and medium-sized merchants to use its solutions. Presently, about 14,000 clients use at least one of StoneCo’s software solutions.

With the ability to provide differentiated services, StoneCo is likely to keep its customer churn low and improve its take rates in the to-be-reported quarter. Moreover, continued build up in the company’s Hub operations is expected to aid results.

Further, inclusion of new solutions in areas like software, banking and credit was well received by StoneCo’s clients in the to-be-reported quarter. Thereby, growth in client base is anticipated to boost the top line in first-quarter 2019.

Notably, management anticipates client net additions to be in the range of 38K to 39.5K in the to-be-reported quarter compared to 33.5K in fourth-quarter 2018. This figure excludes the new client base of about 18K from StoneCo’s investments in Point-of-Sale and ERP software solutions in first-quarter 2019.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP.  Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

StoneCo has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post earnings beat this quarter:

Synopsys, Inc. (SNPS - Free Report) has an Earnings ESP of +1.15% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Verint Systems Inc. (VRNT - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #1.

Agilent Technologies, Inc. (A - Free Report) has an Earnings ESP of +2.10% and a Zacks Rank #2.

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