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Should Earnings Beat Potential Require Action From StoneCo (STNE) Investors?

Simply Wall St · 3d ago
  • StoneCo is coming off a quarter with 1.6% revenue growth year on year and a 24.7% net profit margin, and is now heading into its third quarter 2026 earnings report on 12 November with an Earnings ESP of 2.74% and a Zacks Rank #3.
  • The combination of solid profitability, a market value of about US$1.8b and analyst models pointing to potential earnings outperformance highlights how execution on StoneCo's payments and financial services engine remains central to the story, despite the shares trading near the low end of their 52 week range.
  • We will look at how StoneCo's investment narrative is influenced by the upcoming earnings release and its current profitability profile.

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StoneCo Investment Narrative Recap

For an investor to own StoneCo, belief needs to center on its evolution into a broader financial services platform for Brazilian merchants, where payments, banking and credit sit in one ecosystem. The upcoming 12 November earnings report is a key check on that trajectory because it shows how this engine holds up after a quarter with 1.6% revenue growth and a 24.7% net margin.

The near term swing factor is whether StoneCo can keep profitability resilient while Total Payment Volume growth has been modest and credit risk remains elevated. The biggest risk is that credit costs and non performing loans stay high, which could compress margins even if transaction and banking activity remain stable. The latest Earnings ESP signal is data to watch, but does not by itself change this fundamental risk reward balance.

The most relevant data point tied to the current setup is the company approaching its third quarter 2026 release with an Earnings ESP of 2.74% and a Zacks Rank #3. That combination is often used as a statistical flag for potential earnings outperformance, so it naturally draws attention to how StoneCo is managing its income statement in the short run.

For you as a shareholder, the value of this announcement is less about the label and more about what the print on 12 November says about execution. If StoneCo shows that credit provisioning, deposit funding and merchant churn are being handled in a disciplined way, that supports the thesis around its full service financial model. If the update instead highlights persistent credit strain or weaker merchant trends, the same event becomes a reminder that earnings quality and risk costs remain the core variables to track.

What The Current Analyst Framework Implies For StoneCo

Analysts currently frame StoneCo as a business where revenue is expected to expand at 8.0% per year over the next three years, while profitability normalizes from a 25.7% margin today toward 15.7% over that period. That combination, a bigger top line but slimmer percentage profit, is what feeds into the medium term earnings projections that many investors look at when weighing whether the current share price lines up with the forward story.

On the earnings side, the consensus view groups around profit of R$2.7b by about 2029 compared with R$3.5b today. That points to a decline of R$0.8b in absolute earnings even as the business is modeled to keep adding revenue. For you, the tension is clear. The forecast assumes StoneCo builds more volume through payments and financial services while accepting lower average profitability on each real of revenue that runs through the platform.

That same framework feeds directly into the valuation debate around StoneCo. The analyst models referenced here use revenue of R$17.1b and earnings of R$2.7b in 2029 as the anchor set of numbers, coupled with a P/E of 7.0x applied to those projected profits and a discount rate a little above 10%. This mix of assumptions is what underpins the current set of price targets, rather than any single near term earnings print.

Income today is being valued on a much lower multiple. The shares are trading around 2.8x current earnings, compared with the 7.0x implied multiple on the 2029 numbers in the analyst work and a 16.2x P/E for the wider US diversified financial peer group cited in the report. That gap between the current and modeled future multiples is as important as the forecast profit itself because it shows how much rerating the analyst case implicitly builds in.

For anyone following StoneCo into the 12 November 2026 release, those moving parts are worth keeping in view. Consensus expects the firm to grow into R$17.1b of sales and R$2.7b of earnings while the share count declines around 7.0% per year for the next three years. The share count call matters because, if it plays out, each remaining share is being tied to a larger slice of those future earnings, even with the absolute profit pool modeled to be lower than it is today.

StoneCo is also being benchmarked against its own history and against sector peers at the same time. The future 7.0x P/E embedded in the analyst targets sits well below the 16.2x cited for the broader US diversified financial sector, yet well above the current 2.8x applied to StoneCo itself. That spread highlights how much of the investment debate rests on whether you think the business is priced more like a steadily shrinking profit stream or like a firm that can sustain its financial services platform at the levels implied in those 2029 estimates.

StoneCo's narrative projects R$17.1b revenue and R$2.7b earnings by 2029. This setup assumes 8.0% yearly revenue growth and an earnings decrease of R$0.8b from R$3.5b today.

Uncover why StoneCo's fair value indicates a potential 80% upside to its current price that could narrow quickly.

NasdaqGS:STNE 1-Year Stock Price Chart
NasdaqGS:STNE 1-Year Stock Price Chart

Exploring Other Perspectives

One alternate view focuses on StoneCo’s cost of risk. While the baseline story leans on the banking and credit engine, the most bearish analysts worry that a credit book under pressure could keep earnings closer to about R$2.0b on roughly R$14.9b revenue by 2029. These forecasts were set before this earnings event, so they should be used as moving reference points rather than fixed truths.

Explore 4 other StoneCo fair value estimates, including one that suggests it could be worth just $8.28.

Reach Your Own Conclusion

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Looking For More Investment Ideas Beyond StoneCo?

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