StoneCo: I Keep My ‘Buy’ Despite The Heavy Dip

Summary:

• StoneCo Ltd. is a “Buy” despite recent stock underperformance, driven by strong Q3 FY2024 earnings and promising long-term growth prospects.
• STNE’s Q3 FY2024 highlights include a 7% YoY revenue increase, a 35% YoY adjusted EBIT growth, and a 43% YoY rise in adjusted EPS.
• I think the stock’s decline is attributed to macroeconomic concerns, not company performance, making it an attractive buy at current valuations.
• StoneCo’s 3Q 2024 results demonstrate an efficient, growth-centric, and shareholder value-driven strategy. The stock is trading at a fraction of the industry’s median price-to-earnings ratio.
• I maintain my “Buy” rating and look forward to doubling my STNE long position as soon as I have sufficient cash to do so.

Intro & Thesis

I initiated coverage of StoneCo Ltd. (NASDAQ:STNE) on August 12, 2023, when the stock was trading at $13.52 and since then, STNE has moved in a wide trading range, occasionally trying to move higher

Analyst’s Disclosure: I/we have a beneficial long position in the shares of STNE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

RHold On! Can’t find the equity research you’ve been looking for?

Now you can get access to the latest and highest-quality analysis of recent Wall Street buying and selling ideas with just one subscription to Beyond the Wall Investing! There is a free trial and a special discount of 10% for you. Join us today!