Here's Why StoneCo Ltd. (STNE) Fell More Than Broader Market

In the latest trading session, StoneCo Ltd. (STNE) closed at $13.35, marking a -3.54% move from the previous day. The stock's change was less than the S&P 500's daily loss of 1.51%. Elsewhere, the Dow saw a downswing of 0.97%, while the tech-heavy Nasdaq depreciated by 2.01%.

Shares of the company have depreciated by 18.54% over the course of the past month, underperforming the Computer and Technology sector's loss of 1.84%, and the S&P 500's loss of 3.63%.

The upcoming earnings release of StoneCo Ltd. will be of great interest to investors. The company's earnings per share (EPS) are projected to be $0.48, reflecting a 41.18% increase from the same quarter last year. Meanwhile, our latest consensus estimate is calling for revenue of $694.49 million, up 10.96% from the prior-year quarter.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $1.95 per share and a revenue of $2.72 billion, signifying shifts of +20.37% and +2.97%, respectively, from the last year.

Investors should also take note of any recent adjustments to analyst estimates for StoneCo Ltd. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, there's been a 7% rise in the Zacks Consensus EPS estimate. StoneCo Ltd. is currently a Zacks Rank #4 (Sell).

Looking at valuation, StoneCo Ltd. is presently trading at a Forward P/E ratio of 7.09. This signifies a discount in comparison to the average Forward P/E of 19.06 for its industry.

We can also see that STNE currently has a PEG ratio of 0.25. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Internet - Software industry currently had an average PEG ratio of 1.06 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 149, which puts it in the bottom 40% of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Free: See Our Top Stock And 4 Runners Up

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

StoneCo Ltd. (STNE): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research