StoneCo Ltd. ($STNE) Earnings (Q2 FY22)

 StoneCo Ltd. ($STNE) Earnings and Opinion:


StoneCo is a company in the Technology sector and operates in the Software-Infrastructure industry. The company provides solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. StoneCo was founded in 2000 and is currently headquartered in George Town, the Cayman Islands. The company was first traded on the stock market in 2018.

StoneCo Earnings Results:

  • Revenues of $2.3B beating expectations of $2.21B
  • Adjusted EBITDA of $1.06B beating expectations of $985M
  • Adjusted Net Income of $77M missing expectations of $82M
  • Guidance for Q3 revenues missed expectations
Opinion:
StoneCo is currently down a little under 10% after reporting earnings this afternoon. The big news from the company is that the CFO is gone. This may change the financial structure of the company and this could be for the better or the worse. As for the earnings report, everything looked solid, until we got to the net income. The company missed that metric by $5 million. They also missed consensus estimates for the guided revenue in the next quarter. That is the main reason the stock is lagging after hours. The revenues came in strong, but the net income margin is so slim. I think it may be a good thing that a new CFO takes over, because they need to fix this problem. I don't know how they generate over $2B in revenue and only come out with $77M. I understand it is a foreign company, so I am not too familiar with accounting standards in that regard, but I know IFRS has some similarities to GAAP. I also am not familiar with Tax codes and rules in Cayman Islands, so I could be missing something. As far as valuation goes, the P/E ratio is at 41.2 which is lower than the industry average of 48.55. The P/S ratio is at 0.64 and is relatively low for the industry. The current ratio is 1.24 and the cash outweighs the debt, which are both good signs for the company. In my opinion, the valuation makes the stock seem a little bit better than it is. This stock was hammered during this lat downturn in the market, but has since has increased a little bit. I guess you could say the stock looks some what cheap because it is only trading for $10 a share. However, I am not too interested in this stock because I am a little concerned on the margins. I will keep an eye on it though, if the new CFO executes a solid plan, this stock could be back up to higher levels and gain some upside. 


*Information from Yahoo Finance, Zacks, CMLVIZ, Consensus Gurus

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