Is StoneCo Ltd. (STNE) A Solid Choice On The Value Front?

The stock of StoneCo Ltd. (NASDAQ:STNE) on Tuesday traded at $37.78. The last five days have seen an average of 3,879,784 shares of common stock traded. 10 times new highs were reached in the current year, with a fall of -$46.24. The average number of shares traded over the last 20 days was 3,878,031, while the average volume over the last 50 days totaled 3,989,918.

STNE stock dropped -5.65% since last month. On 10/11/21, the company’s shares reached a one-month low of $30.71. The stock touched a high of $95.12 on 02/17/21, after rallying from a low of $30.71 in 52 weeks. The price of STNE stock has declined by -55.02% or -$46.24 this year, reaching a new high 10 times. Still, the stock price is down -60.28% from the 52-week high.


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Valuation Metrics

StoneCo Ltd. (STNE) has a trailing price-to-earnings (P/E) ratio of 52.80. This level actually compares favorably with the industry at large, as the PE for the Software – Application industry stands at about 118.19. Further, its PE also compares unfavorably with the Technology sector’s trailing 12 months PE ratio, which comes in at 39.09 right now. The PE ratio of StoneCo Ltd. has varied between 167.51 and 26.02 in the last five years. There are also a few other valuation ratios worth considering, including the trailing price-to-sales (P/S) ratio of 20.54, the price-to-book (PB) ratio of 4.37.

For the three months ended June 29, StoneCo Ltd.’s quick ratio was 1.90, while its current ratio was 1.90, indicating its ability to pay off its debt. The company’s long-term debt to equity ratio for the quarter ending June 29 is 0.36, and the total debt to equity ratio is 0.59. As far as profitability goes, gross margin for the trailing twelve months is 71.70% percent. StoneCo Ltd.’s EBITDA margin for the year ended June 29 was 7.84%, whereas its operating margin stood at 31.40% for the same period. Based on annual data, it had gross profit of $494.68 million and revenue of $644.05 million.

Investors will also look at the performance of the company’s management in order to determine the potential profitability of their investment. STNE’s return on assets (ROA) during the last 12 months has been 3.90%. There was a 5.60% return on investment (ROI) in the past year. In the meantime, the return on equity (ROE) for the last 12 months was 8.40%. ROE has averaged 3.34 in the past year for the broader industry.

Earnings Surprise

According to StoneCo Ltd.’s quarterly financial report for the quarter that ended June 29. A lower net income was reported in the quarter under review than the previous quarter. It was predicted that StoneCo Ltd.’s quarterly earnings would be -$0.09, but it ended up being $0.19, beating the consensus by -147.40%. EBITDA was $159.15 million for the quarter. At the end of StoneCo Ltd.’s most recent quarter ended June 29, its liabilities totaled 4.09 billion, while its total debt was $6.29 billion.

Technical Picture

Here’s a quick look at StoneCo Ltd.’s (STNE) price momentum from a technical perspective. As of 25 October, the RSI 9-day stood at 55.22%, suggesting the stock is Neutral, with a 64.47% historical volatility rate.

The stochastic %K and %D were 71.95% and 77.49% respectively, while the average true range (ATR) was 1.82. Based on the 14-day stochastic reading of 74.71%, the RSI (14) reading is 49.85%. On the 9-day MACD Oscillator, the stock is at 0.07, and the 14-day reading is at 1.84.

Analyst Ratings

Analysts have assigned StoneCo Ltd. (STNE) an Overweight rating. STNE is a stock that is recommended for selling by 0 brokerage firms, while 6 companies recommend holding. The stock is underweighted by 0 analysts. Among the analysts who rate the stock, 0 rates it overweight and 10 others recommend it as a buy.

What is STNE’s price target for the next 12 months?

The current consensus forecast for the stock is between $225.27 and $511.95, with a median target price of $302.05. In analyzing these forecasts, the average price target given by analysts for StoneCo Ltd. (STNE) is $325.89.

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