In a rapidly evolving digital landscape, StoneCo Ltd. is revolutionizing how Brazilian merchants engage in electronic commerce, seamlessly integrating in-store, online, and mobile transactions. As a formidable player in the financial technology sector, StoneCo’s innovative solutions empower over 1.7M small and medium-sized businesses, enhancing their operational efficiency and customer reach. With a strong reputation for quality and market influence, one must consider: do StoneCo’s fundamentals still align with its current market valuation and growth potential?
Table of contents
Company Description
StoneCo Ltd. is a prominent financial technology provider based in George Town, Cayman Islands, specializing in electronic commerce solutions for merchants across Brazil. Founded in 2000, the company operates primarily in the Software – Infrastructure sector, offering a range of services through its proprietary Stone Hubs, which facilitate seamless transactions for small and medium-sized businesses and digital merchants. With a client base of approximately 1.77M, StoneCo has positioned itself as a leader in the Brazilian fintech landscape, emphasizing innovation and local service delivery. As a subsidiary of HR Holdings, LLC, StoneCo plays a crucial role in shaping Brazil’s digital economy, focusing on enhancing commerce through technology and streamlined payment solutions.
Fundamental Analysis
In this section, I will analyze StoneCo Ltd.’s income statement, financial ratios, and dividend payout policy to evaluate its financial health and investment potential.
Income Statement
The following table summarizes the income statement for StoneCo Ltd. (STNE) over the past five fiscal years, highlighting key financial metrics.
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 3.18B | 4.58B | 9.02B | 11.36B | 12.74B |
| Cost of Revenue | 770M | 1.71B | 2.67B | 2.98B | 3.39B |
| Operating Expenses | 898M | 1.83B | 2.63B | 2.89B | 3.24B |
| Gross Profit | 2.41B | 2.86B | 6.35B | 8.38B | 9.35B |
| EBITDA | 1.72B | -438M | 1.35B | 3.54B | 988M |
| EBIT | 1.47B | -945M | 546M | 2.67B | 39M |
| Interest Expense | 340M | 500M | 934M | 695M | 1.06B |
| Net Income | 854M | -1.36B | -519M | 1.59B | -1.52B |
| EPS | 2.95 | -4.46 | -1.69 | 4.74 | -5.02 |
| Filing Date | 2021-04-07 | 2022-04-29 | 2023-05-01 | 2024-04-24 | 2025-04-24 |
Over the five-year period, StoneCo’s revenue has shown a consistent upward trend, increasing from 3.18B in 2020 to 12.74B in 2024. However, net income fluctuated significantly, with a peak profit of 1.59B in 2023, followed by a sharp decline to a loss of 1.52B in 2024. The gross profit margin has remained relatively stable, although operating expenses have risen, impacting profitability. The most recent year indicates that despite strong revenue growth, inefficiencies and increased costs have hindered earnings, demonstrating a need for improved cost management and operational effectiveness moving forward.
Financial Ratios
Here is a summary of the key financial ratios for StoneCo Ltd. (STNE) over the last five fiscal years:
| Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 26.86% | -29.69% | -5.76% | 14.01% | -11.89% |
| ROE | 5.75% | -10.06% | -4.03% | 10.89% | -12.87% |
| ROIC | 5.22% | 4.27% | 25.37% | 20.82% | 34.49% |
| WACC | 9.70% | 8.00% | 8.00% | 8.00% | 8.00% |
| P/E | 40.78 | -21.34 | -29.87 | 18.46 | -9.84 |
| P/B | 8.48 | 2.15 | 1.20 | 2.01 | 1.27 |
| Current Ratio | 2.19 | 1.31 | 1.22 | 1.27 | 1.37 |
| Quick Ratio | 2.18 | 1.30 | 1.21 | 1.27 | 1.37 |
| D/E | 0.41 | 0.62 | 0.43 | 0.38 | 1.10 |
| Debt-to-Assets | 19.16% | 19.88% | 13.14% | 11.33% | 23.53% |
| Interest Coverage | 4.45 | 2.07 | 3.98 | 7.90 | 5.79 |
| Asset Turnover | 0.10 | 0.11 | 0.21 | 0.23 | 0.23 |
| Fixed Asset Turnover | 4.43 | 2.92 | 5.49 | 6.84 | 6.95 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Interpretation of Financial Ratios
In 2024, StoneCo’s financial ratios reveal a mixed performance. The negative net margin (-11.89%) and ROE (-12.87%) indicate challenges in profitability and shareholder returns. However, the ROIC of 34.49% is robust, suggesting efficient capital use. The increasing D/E ratio (1.10) may signal rising debt levels, raising concerns about financial leverage and risk.
Evolution of Financial Ratios
Over the last five years, StoneCo’s financial ratios have exhibited significant volatility. While operating efficiency has improved (notably ROIC), profitability ratios have fluctuated, culminating in a negative net margin in 2024, which may raise concerns about the company’s ability to sustain growth and manage debt effectively.
Distribution Policy
StoneCo Ltd. (STNE) does not currently pay dividends, a decision likely influenced by its negative net income and ongoing reinvestment strategy focused on growth and innovation. This approach aligns with their high growth phase, where prioritizing research and development over immediate shareholder returns can create long-term value. Additionally, the company has engaged in share buybacks, which can signal confidence in its future prospects. Overall, this strategy, while risky, may support sustainable long-term value creation for shareholders.
Sector Analysis
StoneCo Ltd. operates in the Software – Infrastructure industry, providing financial technology solutions in Brazil, targeting small to medium-sized businesses and competing with numerous fintech companies.
Strategic Positioning
StoneCo Ltd. (STNE) operates within the competitive financial technology sector in Brazil, focusing on providing electronic commerce solutions to small and medium-sized businesses. With a market cap of approximately 4.23B and serving around 1.77M clients, StoneCo holds a significant market share in its niche. However, it faces competitive pressure from both established players and new entrants, which are leveraging innovative technologies to disrupt the market. The company’s beta of 1.842 indicates higher volatility, suggesting that while there are growth opportunities, investors should remain cautious and manage risks effectively as the landscape evolves.
Key Products
StoneCo Ltd. offers a range of innovative financial technology solutions tailored for merchants and integrated partners in Brazil. Below is a table summarizing some of the key products that contribute to the company’s success in the electronic commerce space.
| Product | Description |
|---|---|
| Stone Hub | A comprehensive point-of-sale (POS) system that enables merchants to process transactions across physical and digital channels seamlessly. |
| Payment Gateway | A solution that facilitates online payments for e-commerce businesses, providing security and ease of integration with various online platforms. |
| Stone Pagamentos | A digital payment solution aimed at small and medium-sized enterprises, allowing them to accept payments via mobile devices and online. |
| Analytics Platform | A tool that provides merchants with insights into sales performance and customer behavior, helping them make data-driven decisions. |
| Stone Connect | An integration service that allows software vendors to incorporate Stone’s payment solutions into their applications, enhancing the overall user experience. |
Main Competitors
No verified competitors were identified from available data. StoneCo Ltd. primarily operates in the financial technology sector, focusing on providing solutions for electronic commerce across various channels in Brazil. The company serves approximately 1.77M clients, positioning itself strongly within the small-and-medium-sized business market, indicating a significant competitive presence in its niche.
Competitive Advantages
StoneCo Ltd. (STNE) holds several competitive advantages within the Brazilian financial technology sector. The company’s proprietary Stone Hubs enable hyper-local sales and services, establishing strong relationships with small- and medium-sized businesses. As e-commerce continues to expand, StoneCo is well-positioned to innovate further with new products tailored for digital merchants and integrated partners. Additionally, the growing demand for seamless payment solutions presents opportunities in untapped markets, enhancing its future growth potential. With a robust client base of approximately 1.77M, StoneCo is prepared to leverage its expertise to capitalize on these emerging opportunities.
SWOT Analysis
The SWOT analysis provides a framework for evaluating StoneCo Ltd.’s current position and strategic potential.
Strengths
- Strong market presence in Brazil
- Diverse product offerings
- Established client base of 1.77M
Weaknesses
- High beta of 1.842 indicates volatility
- No dividends paid
- Heavy reliance on the Brazilian market
Opportunities
- Growth in e-commerce
- Expansion into new markets
- Partnerships with digital platforms
Threats
- Intense competition in fintech
- Economic instability in Brazil
- Regulatory changes affecting operations
Overall, the SWOT assessment highlights that while StoneCo Ltd. has significant strengths and opportunities for growth, it must navigate challenges from market volatility and competition. A strategic focus on diversifying its market and product offerings could mitigate risks and enhance its competitive position.
Stock Analysis
Over the past year, StoneCo Ltd. (STNE) has experienced significant price movements, marked by notable fluctuations that reflect the broader trading dynamics of the market.
Trend Analysis
Analyzing the stock’s performance over the past year, I observe a price change of -10.45%. This decline categorizes the overall trend as bearish, indicating a downward trajectory in stock value. The highest price during this period was 19.4, while the lowest reached 7.85. Furthermore, the trend shows signs of deceleration, suggesting that the rate of decline is lessening. The standard deviation of 3.1 indicates a moderate level of volatility in price movements.
Volume Analysis
In the last three months, StoneCo’s trading volume has totaled approximately 3.12B shares, with buyer volume at 1.44B and seller volume at 1.67B. The volume trend is increasing, although the activity appears slightly seller-driven, with sellers accounting for 53.99% of the total volume. This trend indicates a cautious investor sentiment, as market participants seem to be favoring selling actions amid the current bearish conditions.
Analyst Opinions
Recent analyst recommendations for StoneCo Ltd. (STNE) present a cautious outlook. The overall rating stands at C, indicating a hold position. Analysts highlight concerns about low return on equity and assets, with scores of 1 in both categories. However, the discounted cash flow score of 3 suggests potential for future growth. Notably, there is a consensus to hold rather than buy or sell, reflecting a balanced approach amid current market conditions.
Stock Grades
StoneCo Ltd. (STNE) has received consistent evaluations from reputable grading companies, indicating a stable outlook in the market. Below is a summary of the latest stock grades:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Goldman Sachs | Maintain | Buy | 2025-10-14 |
| B of A Securities | Maintain | Buy | 2025-09-09 |
| UBS | Maintain | Buy | 2025-08-29 |
| JP Morgan | Maintain | Overweight | 2025-07-16 |
| Barclays | Maintain | Equal Weight | 2025-05-12 |
| Barclays | Maintain | Equal Weight | 2025-04-23 |
| Citigroup | Upgrade | Buy | 2025-04-22 |
| Morgan Stanley | Maintain | Underweight | 2025-03-21 |
| Barclays | Maintain | Equal Weight | 2025-03-21 |
| Goldman Sachs | Maintain | Buy | 2025-02-06 |
Overall, the trend in grades for StoneCo Ltd. shows a strong preference for “Buy,” indicating a positive sentiment from analysts. This could suggest that the stock remains a favorable option for investors looking for growth opportunities in the current market environment.
Target Prices
The consensus target price for StoneCo Ltd. (STNE) is clear and unified among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 20 | 20 | 20 |
Overall, analysts expect the stock to stabilize around a target price of $20, indicating a cautious outlook on its potential performance.
Consumer Opinions
Consumer sentiment towards StoneCo Ltd. (STNE) reveals a mixed bag of experiences, reflecting both satisfaction and areas needing improvement.
| Positive Reviews | Negative Reviews |
|---|---|
| “Excellent customer service and support.” | “The platform can be confusing to navigate.” |
| “Reliable payment processing solutions.” | “High fees compared to competitors.” |
| “User-friendly interface for transactions.” | “Limited features for advanced users.” |
Overall, consumer feedback highlights strong customer service and reliability as key strengths, while confusion in navigation and high fees are common weaknesses that need to be addressed.
Risk Analysis
In this section, I will outline the potential risks associated with investing in StoneCo Ltd. (STNE), providing a clear understanding of their implications.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in market conditions affecting stock prices. | High | High |
| Regulatory Changes | Changes in financial regulations impacting operations. | Medium | High |
| Competition | Increased competition from fintech companies. | High | Medium |
| Currency Fluctuation | Foreign exchange risks impacting revenue from international operations. | Medium | Medium |
| Cybersecurity Threats | Risks of data breaches and cyber-attacks on financial systems. | Low | High |
The most likely and impactful risks for StoneCo Ltd. are market volatility and regulatory changes, both of which can significantly affect the company’s financial health and stock performance. Given the current economic climate, these risks warrant careful consideration.
Should You Buy StoneCo Ltd.?
StoneCo Ltd. is currently facing significant challenges, reflected in its negative net margin of -11.89%, indicating unprofitability. The company carries a total debt of 2.41B, which contributes to a high debt-to-equity ratio of 0.49, raising concerns about its financial leverage. Over the past fiscal years, the fundamentals have shown decline, with a recent rating of C suggesting moderate performance.
Given the recent data, I find it necessary to evaluate the situation based on critical financial indicators. The net margin is significantly negative at -11.89%, and the company’s return on invested capital (ROIC) stands at 34.49%, which is substantially higher than its weighted average cost of capital (WACC) at 10.75%. However, the long-term trend is bearish, and in the recent period, seller volume has exceeded buyer volume.
A. Favorable signals The company demonstrates strong value creation due to its ROIC of 34.49% exceeding the WACC of 10.75%. This suggests that the business generates a robust return on its invested capital. Additionally, the recent financial performance indicates a significant increase in revenue, supporting potential future growth.
B. Unfavorable signals The net margin is significantly negative, which indicates ongoing losses and challenges in profitability. The long-term trend is bearish, and recent selling pressure is evident, with seller volume surpassing buyer volume.
C. In conclusion, while the company exhibits some favorable aspects, such as high ROIC indicating value creation, the negative net margin and bearish long-term trend suggest that it might be prudent to wait for more favorable conditions.
In light of the potential risks, including significant debt levels and ongoing losses, I would advise caution regarding any investment decisions at this time.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Is StoneCo (STNE) Stock Undervalued Right Now? – Yahoo Finance (Nov 18, 2025)
- Vise Technologies Inc. Purchases Shares of 28,645 StoneCo Ltd. $STNE – MarketBeat (Nov 17, 2025)
- StoneCo Ltd. (STNE) Stock Slides as Market Rises: Facts to Know Before You Trade – Nasdaq (Oct 13, 2025)
- Los Angeles Capital Management LLC Takes $706,000 Position in StoneCo Ltd. $STNE – MarketBeat (Nov 15, 2025)
- StoneCo Ltd. (STNE) Beats Stock Market Upswing: What Investors Need to Know – Yahoo Finance (Oct 27, 2025)
For more information about StoneCo Ltd., please visit the official website: stone.co
