StoneCo Ltd. (STNE) Laps the Stock Market: Here's Why

In the latest trading session, StoneCo Ltd. (STNE) closed at $14.36, marking a +1.7% move from the previous day. The stock outperformed the S&P 500, which registered a daily gain of 0.72%. Meanwhile, the Dow experienced a rise of 0.48%, and the technology-dominated Nasdaq saw an increase of 1.16%.

Coming into today, shares of the company had gained 2.84% in the past month. In that same time, the Computer and Technology sector lost 5.35%, while the S&P 500 lost 4.99%.

The investment community will be closely monitoring the performance of StoneCo Ltd. in its forthcoming earnings report. The company's upcoming EPS is projected at $0.44, signifying a 29.41% increase compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $694.49 million, showing a 10.96% escalation compared to the year-ago quarter.

For the full year, the Zacks Consensus Estimates project earnings of $1.92 per share and a revenue of $2.71 billion, demonstrating changes of +18.52% and +2.69%, respectively, from the preceding year.

Investors should also take note of any recent adjustments to analyst estimates for StoneCo Ltd. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 1.71% lower within the past month. As of now, StoneCo Ltd. holds a Zacks Rank of #3 (Hold).

Looking at its valuation, StoneCo Ltd. is holding a Forward P/E ratio of 7.35. For comparison, its industry has an average Forward P/E of 19.24, which means StoneCo Ltd. is trading at a discount to the group.

It is also worth noting that STNE currently has a PEG ratio of 0.31. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. By the end of yesterday's trading, the Internet - Software industry had an average PEG ratio of 1.06.

The Internet - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 152, placing it within the bottom 38% of over 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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

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