StoneCo Ltd. (STNE) Sees a More Significant Dip Than Broader Market: Some Facts to Know

StoneCo Ltd. (STNE) ended the recent trading session at $14.00, demonstrating a -2.51% change from the preceding day's closing price. The stock's change was less than the S&P 500's daily loss of 1.74%. At the same time, the Dow lost 1.01%, and the tech-heavy Nasdaq lost 2.38%.

The company's stock has dropped by 14.88% in the past month, falling short of the Computer and Technology sector's loss of 5.77% and the S&P 500's loss of 4.99%.

The investment community will be closely monitoring the performance of StoneCo Ltd. in its forthcoming earnings report. On that day, StoneCo Ltd. is projected to report earnings of $0.45 per share, which would represent year-over-year growth of 32.35%. In the meantime, our current consensus estimate forecasts the revenue to be $694.49 million, indicating a 10.96% growth compared to the corresponding quarter of the prior year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $1.92 per share and revenue of $2.72 billion, indicating changes of +18.52% and +2.97%, respectively, compared to the previous year.

Investors should also take note of any recent adjustments to analyst estimates for StoneCo Ltd. These revisions typically reflect the latest short-term business trends, which can change frequently. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 5.97% higher within the past month. StoneCo Ltd. is currently sporting a Zacks Rank of #4 (Sell).

Looking at valuation, StoneCo Ltd. is presently trading at a Forward P/E ratio of 7.47. For comparison, its industry has an average Forward P/E of 18.93, 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 0.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Software industry had an average PEG ratio of 1.04 as trading concluded yesterday.

The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 157, this industry ranks in the bottom 36% of all industries, numbering over 250.

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

To follow STNE in the coming trading sessions, be sure to utilize Zacks.com.

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

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