- StoneCo is drawing fresh attention as its P/E sits well below the broader diversified financial sector, while the business continues repositioning around payment processing, banking and credit services in Brazil.
- The combination of a lower valuation multiple, a growing focus on higher margin financial services, and cautious credit risk management is sharpening debate about how fully StoneCo’s earnings power is reflected in its current pricing.
- We will look at how StoneCo's investment narrative is affected by its low P/E multiple relative to its earnings potential.
Compare StoneCo's rerating potential with other financials trading on beaten down multiples by scanning our hand picked list of 35 high quality undervalued stocks.
StoneCo Investment Narrative Recap
To own StoneCo, you need to believe the transition toward a full service financial platform for Brazilian merchants can keep building earnings, even with a low P/E and a history of share price volatility. The near term swing factor is execution in payments, banking and credit as the business leans harder into higher margin services while total payment volume growth has recently been modest.
The biggest risk remains credit quality and funding. Cost of risk in the loan book is elevated, non performing loans are rising, and interest costs are not comfortably covered by earnings. Recent political headlines in Brazil have moved the share price but do not materially change these core operational questions.
The most relevant fresh datapoint tied to the StoneCo story is the upcoming earnings report on 12 November 2026, with projected EPS of US$0.50 and 16.28% year over year growth. In the short term, results here can either reinforce the idea that earnings power is underappreciated or nudge investors back toward the more cautious view on credit risk and funding.
Analysts have nudged EPS estimates slightly higher in the last month, which signals a bit more confidence in near term profitability but does not resolve the bigger concern that earnings are forecast to decline over the next three years. For investors, the key question is whether this print can show progress on cost of risk, funding mix and deposit gathering relative to the low current P/E.
What Current Assumptions Say About StoneCo
StoneCo's current analyst framework leans heavily on a few headline assumptions that you can pressure test for yourself. Revenue is modeled to grow at 8.2% a year over the next three years, while profit margins move the other way, compressing from 25.7% today to 16.1% by 2029. In that setup, earnings are expected to decline from R$3.5b today to R$2.8b by 2029, even though analysts still expect the share count to shrink about 7% a year over the coming three years. The debate for you as an investor is whether that mix of mid single digit top line growth, lower profitability and fewer shares really captures the earnings power of a full service merchant bank in Brazil.
StoneCo's narrative projects R$17.2b revenue and R$2.8b earnings by 2029. This assumes 8.2% yearly revenue growth and an earnings decrease of R$700m from R$3.5b today.
The spread between current and projected profit is already feeding straight into the valuation discussion. Analysts are anchoring on a 2029 earnings consensus of R$2.8b and arguing that a P/E around 6.5x on those profits would need to be met for their price targets to make sense. That multiple would be higher than the 4.1x attached to StoneCo today but still far below the 16.9x tagged to the broader US diversified financial sector. The underlying message is clear. For the multiple to rise toward that 6.5x mark, the market would need more comfort that margin pressure, credit losses and funding costs are contained well enough for the EPS path to roughly match the current script rather than slip below it.
Uncover why StoneCo's fair value indicates a 29% potential upside to its current price that may not last much longer.
Exploring Other Perspectives
Credit risk sits at the center of the alternate StoneCo story. The most optimistic analysts lean on the idea that earnings can climb toward about R$3.6b on roughly 13.8% yearly revenue growth, compared with the R$2.8b consensus path. Yet even those projections were set before this news and may be revised once fresh data lands. You can use that spread in expectations as a reminder that reasonable views differ widely and that it is worth testing several narratives before deciding where you stand.
Explore 4 other StoneCo fair value estimates, including one that suggests as much as 379% upside from the current price!
Form Your Own Verdict
Don't just follow the ticker. Dig into the data and build a conviction that's truly your own.
- A great starting point for your StoneCo research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
- See our latest analysis for StoneCo. The report includes a comprehensive fundamental analysis summarized in a single visual, the Snowflake, making it easy to evaluate StoneCo's overall financial health at a glance.
Looking For More Investment Ideas Beyond StoneCo?
Once you have a view on StoneCo, it helps to compare it with other opportunities so you can decide where each position really earns a place in your portfolio.
- If you want income to do more of the heavy lifting in your returns, scan a curated set of high yield payers through 8 dividend fortresses that may warrant a closer look.
- For investors who care most about capital preservation and steadier fundamentals, filter the market using a 32 resilient stocks with low risk scores that screens for sturdier balance sheets and lower risk profiles.
- If you prefer to hunt for less crowded stories with room for more attention over time, start with a 20 high quality undiscovered gems that surfaces underfollowed companies with solid underlying metrics.
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