StoneCo (STNE) experienced a notable rise in its stock price this week, advancing by 14.2%, as reported by S&P Global Market Intelligence. The upward trend was attributed to the company’s quarterly performance exceeding expectations. The Brazil-based fintech firm released its fourth-quarter financial results after markets closed on Tuesday, surpassing Wall Street’s forecasts for both sales and earnings. StoneCo reported sales totaling 3.61 billion Brazilian real (approximately $636 million), outperforming the expected 3.58 billion real (around $631 million) as projected by analysts. The company’s adjusted non-GAAP earnings per share amounted to $0.40, exceeding analyst predictions by $0.06 per share.
In the fourth quarter, StoneCo experienced an approximate 11% year-over-year increase in revenue, while adjusted earnings per share grew by roughly 47%. This growth was driven by a broader customer base and an increase in the average revenue per user within its financial services division. Total payment volumes from small and medium-sized business customers utilizing StoneCo’s platform rose by 22% compared to the same period the previous year. Additionally, the company continued to expand its credit business during the quarter.
Despite the recent positive performance, StoneCo’s stock remains approximately 34% lower than it was a year ago. The company’s share price has been impacted by macroeconomic challenges in Brazil and some slowdown in growth. However, the outlook for the fintech services provider may be improving. As inflation begins to ease in Brazil, the potential for StoneCo to achieve enhanced business outcomes and stock performance increases. Nevertheless, macroeconomic factors continue to pose significant risks for the company. Currently, StoneCo is regarded as valuably priced, with its stock trading at around eight times this year’s projected earnings.