StoneCo Ltd. Class A Common Shares (STNE)

FairStock Score: 82/100 — HIGH CONVICTION

Key Financials

Strengths

• High return on equity of 20.8% demonstrating efficient capital deployment
• Revenue growth of 16.0% demonstrates strong top-line momentum
• FairStock composite score of 82/100 places it in the top tier across value, quality, and momentum factors

Concerns

• Altman Z-Score of 0.6 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

StoneCo Ltd. Class A Common Shares is a small-cap technology company valued at $3.6 billion. The business generates $13.4 billion in annual revenue with a 3.7% net margin. From a quality standpoint, StoneCo shows distressed Altman Z-Score of 0.6 warrants caution and strong 21% ROE. On valuation, the stock is deeply undervalued on a P/E basis at 7.3x, with offers a 68% margin of safety vs Graham Number of $45. Growth dynamics show revenue growing at 16.0% and profit growth of 31.0%. Our composite FairStock Score of 82/100 reflects strong fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

StoneCo's 16% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. Operational leverage in the business model means incremental revenue growth could disproportionately boost bottom-line profitability.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the technology space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer