Fact based stock research
StoneCo (NasdaqGS:STNE)

KYG851581069

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

StoneCo stock research in summary

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ANALYSIS: With an Obermatt Combined Rank of 49 (worse than 51% compared with investment alternatives), StoneCo (Data Processing & Outsourcing, Cayman Islands) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of StoneCo are low in value (priced high) with a consolidated Value Rank of 33 (worse than 67% of alternatives) and show below-average growth (Growth Rank of 37) but are safely financed (Safety Rank of 85), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 49, is a hold recommendation based on StoneCo's financial characteristics. As the company StoneCo's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 33) and low growth (Obermatt Growth Rank of 37), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 85) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	33
Growth Rank	37
Safety Rank	85
Combined Rank	49

Country	Cayman Islands
Industry	Data Processing & Outsourcing
Index	NASDAQ
Size class	Large

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: StoneCo

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	13	5	5	33
GROWTH
GROWTH	20	45	89	37
SAFETY
SAFETY	76	58	72	85
SENTIMENT
SENTIMENT	n/a	42	47	^new
360° VIEW
360° VIEW	n/a	19	64	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better StoneCo is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	13	5	5	33
GROWTH
GROWTH	20	45	89	37
SAFETY
SAFETY	76	58	72	85
COMBINED
COMBINED	76	24	76	49

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of StoneCo the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 33 (worse than 67% compared with alternatives), StoneCo shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half are above average for StoneCo. Price-to-Sales (P/S) is 66, which means that the stock price compared with what market professionals expect for future sales is lower than for 66% of comparable companies, indicating a good value concerning StoneCo's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 56% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 1 (dividends are expected to be higher than for 1% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 59% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for StoneCo to 41. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 33, is a hold recommendation based on StoneCo's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner on assets than its competitors. For instance, the company could be leasing its production facilities, or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the low Dividend Yield is also explained as such companies tend to invest their income into market development. The other good value ranks for Sales and Profits are encouraging indicators for the stock price value. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	7	24	46	66
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	33	5	13	56
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	27	26	18	41
DIVIDEND YIELD
DIVIDEND YIELD	1	1	1	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	13	5	5	33

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of StoneCo; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 37 (better than 37% compared with alternatives), StoneCo shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for StoneCo. Sales Growth has a rank of 56, which means that, currently, professionals expect the company to grow more than 56% of its competitors. Profit Growth with a rank of 86 is also above average. But Capital Growth has only a rank of 43, and Stock Returns with 1 are also below-average. Stock returns for StoneCo have recently been below 99% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 37, is a hold recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for StoneCo. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with the Obermatt Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	88	98	67	56
PROFIT GROWTH
PROFIT GROWTH	n/a	4	96	86
CAPITAL GROWTH
CAPITAL GROWTH	n/a	85	23	43
STOCK RETURNS
STOCK RETURNS	1	1	97	1
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	20	45	89	37

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of StoneCo.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 85 (better than 85% compared with alternatives) for 2024, the company StoneCo has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of StoneCo is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for StoneCo. Refinancing is at 85, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 85% of its competitors. Liquidity is also good at 86, meaning the company generates more profit to service its debt than 86% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 36, which means the company has an above-average debt-to-equity ratio. It has more debt than 64% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 85 (better than 85% compared with alternatives), StoneCo has a financing structure that is significantly safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and StoneCo could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. In the long-term, investors may have a debt challenge with StoneCo and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	71	29	36	36
REFINANCING
REFINANCING	37	78	62	85
LIQUIDITY
LIQUIDITY	70	58	79	86
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	76	58	72	85

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of StoneCo and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	21	34	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	90	72	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	n/a	n/a	^new
MARKET PULSE
MARKET PULSE	n/a	36	40	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	42	47	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for StoneCo.
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