Entering text into the input field will update the search result below

StoneCo Looks Strong As It Recaptures Much Of Its Business From March

Jun. 07, 2020 4:45 PM ETStoneCo Ltd. (STNE)4 Comments
Gary Bourgeault profile picture
Gary Bourgeault


  • StoneCo surprises the market with a solid earnings report even with the impact of COVID-19 on its business.
  • Operating in the trending payments growth segment, the company should continue to enjoy solid growth for several years.
  • Analysts sees the company significantly improving earnings per share in 2021 and 2022.

stoneco should do grow strongly over the next two to three years.source: investors.com

Operating in the rapidly growing payment segment, StoneCo (NASDAQ:STNE) produced a surprisingly decent quarter in light of the impact from COVID-19 on the performance of the company in the second half of March.

The company, which is similar to Square, rapidly regained 87 percent of its e-commerce volume in April and May, confirming the strength of the payment sector, and the company's market-leading position in the Brazilian market.

In this article we'll look at the prospects of the company for the next couple of years, and why its growth trajectory should be sustainable for a number of years.

Latest earnings

In the first quarter StoneCo boosted revenue to $135 million, up 34 percent. Adjusted net income dropped 13 percent to $30.5 million as a result of investing in a new business line. Free cash flow jumped to $47.1 million, far above the negative $68.2 million year-over-year.

Management said its second quarter adjusted pretax margin will be in a range of 20 percent to 24 percent, against the 32.6 percent in the first quarter.

What was impressive in the reporting period was how well the company rebounded with its total payment volume (TPV) after the weak last couple of weeks of March.

Up until March 15 the company had enjoyed 52 percent growth in TPV. In the last couple of weeks in March it dropped by 4 percent. In April it started to reverse direction, increasing TPV by 9 percent, and in May it had rebounded by 23 percent by the third week of the month. Even with the temporary headwinds, it looks like StoneCo is going to have a solid second quarter.

As for TPV growth measured against Q1 of 2019, it was up 42 percent to $7.08 billion near the end of May, based upon exchange rates at the time.

This article was written by

Gary Bourgeault profile picture
I am a former investment advisor and owner of several businesses. These days I invest only for myself while continuing to write on a variety of financial and economic topics.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (4)

Pegasus5 profile picture
This company has a great future and it looks that have a good Manager team, but this quarter would be a lot uglier then the previous one, Brasil right now has much much more covid19 cases then it had on March, this is the ugly Quarter for Stoneco, thats why they fired 20% of employees and sold a % of their shares for hundreds of Million $ in the last 3 weeks.

I have a shares of Stoneco and really believe this will be a big company in the next years, but right now they are in a delicate position.
In the other countries, e-commerce volume skyrocketed during pandemic crisis, and STNE process 51% of e-commerce payment transaction.. Hope it helps a lot.
Adambombfx profile picture
Very good article, thank you very much. I own both SQ and STNE and up on both nicely. The future looks good for both with sizeable gains ahead.
I like this company and think it will do very well. The secular trend to digital payments is getting kicked up a notch due to the pandemic.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.