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XP: Strong Growth Potential Via New Business Area Credit Cards

Apr. 11, 2022 6:29 PM ETXP Inc. (XP)9 Comments
Frederik Mueller profile picture
Frederik Mueller


  • XP increased its revenue by 47% in fiscal year 2021 compared to fiscal year 2020. This growth in revenue shows that the company is on track.
  • XP's new business areas of credits, credit cards, insurance and pension funds already contribute to a significant part of the company's total revenue.
  • By offering a zero-fee credit card, XP is consistently expanding into the traditional banking business.
  • The EPS multiplier method indicates that XP is currently undervalued.

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Hände bei der Auswahl einer Kreditkarte

kiattisakch/E+ via Getty Images

This article was written by

Frederik Mueller profile picture
I specialize in constructing investment portfolios aimed at generating additional income through dividends. My focus lies on identifying companies with significant competitive advantages and strong financials that can provide you with an attractive Dividend Yield and Dividend Growth, thus enabling you to augment your dividend income annually. By combining high Dividend Yield and Dividend Growth companies, you can gradually reduce your dependence on the broader stock market fluctuations.I also assist you in achieving a well-diversified portfolio across various sectors and industries. This diversification strategy aims to minimize portfolio volatility and mitigate risk. I also suggest incorporating companies with a low Beta Factor, which further contributes to reducing the overall risk level of your investment portfolio. My suggested investment portfolios commonly consist of a blend of ETFs and individual companies, emphasizing broad diversification and risk reduction.The selection process for high dividend yield and dividend growth companies within the investment portfolio is meticulously curated. I prioritize the pursuit of total return, encompassing both capital gains and dividends, rather than solely focusing on dividends in isolation. This approach ensures that your portfolio is designed to maximize returns while considering the full spectrum of potential income sources. By leveraging my expertise, you can benefit from a well-crafted investment portfolio that aims to generate extra income through dividends, while reducing risk through diversification, and prioritizing total return.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of XP, ITUB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. 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.

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Comments (9)

Frederick, was this quarter as horrible as suggested by the market’s reaction?
Down 20 percent….ouch!
Frederik Mueller profile picture
@presikakid Thank you very much for commenting on this XP analysis. Yes, XP reported lower Y/Y profitability in 2Q22, especially because of company's investments in certain new initiatives. Here you can find a Seeking Alpha article on it:


Next week I will probably write another analysis on XP, in which I will also comment the latest 2Q22 results. I will let you know when I finish the analysis. Have a nice weekend!
Frederik Mueller profile picture
@presikakid Here I provide you with the link of my latest analysis about XP:

Value Validater profile picture
XP is the Charles Schwab of Brazil. XP is a technology-enabled, scaled, growing financial services leader in Brazil. The current stock price reflects economic and political uncertainty in Brazil. Patience will be rewarded.
Krypto profile picture
Tough to compete against Uncle Warren's companies. How leveraged is XP?
Frederik Mueller profile picture
@Krypto Thank you for reading and for commenting on my article! Here I provide you with some of XP's Leverage Ratios:

Debt/Assets Ratio: 0.41x
Debt/Equity Ratio: 3.98x
Debt/Capital Ratio: 0.80x
Krypto profile picture
@Frederik Mueller Thank you for your response. How do those compare to similar companies?
Frederik Mueller profile picture
@Krypto You are welcome!

Please find below the Leverage Ratios of Banco BTG Pactual, a Brazil-based bank focused on investment banking and one of XP’s main competitors in Brazil:

Debt/Assets Ratio: 0.39x
Debt/Equity Ratio: 3.60x
Debt/Capital Ratio: 0.78x

For further comparison, here you can find the Leverage Ratios of Banco Bradesco, another Brazil-based bank:

Debt/Assets Ratio: 0,18x
Debt/Equity Ratio: 2,06x
Debt/Capital Ratio: 0,67x

Let me know, if I can help you anything else!
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