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StoneCo Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

·3 min read

StoneCo Ltd. (NASDAQ:STNE) just released its latest first-quarter report and things are not looking great. Unfortunately, StoneCo delivered a serious earnings miss. Revenues of R$868m were 12% below expectations, and statutory earnings per share of R$0.50 missed estimates by 45%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for StoneCo

earnings-and-revenue-growth
earnings-and-revenue-growth

Following the latest results, StoneCo's eight analysts are now forecasting revenues of R$5.49b in 2021. This would be a major 65% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 73% to R$4.98. Before this earnings report, the analysts had been forecasting revenues of R$5.51b and earnings per share (EPS) of R$5.07 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of R$467, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on StoneCo, with the most bullish analyst valuing it at R$112 and the most bearish at R$59.75 per share. This is a very narrow spread of estimates, implying either that StoneCo is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting StoneCo's growth to accelerate, with the forecast 95% annualised growth to the end of 2021 ranking favourably alongside historical growth of 39% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect StoneCo to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for StoneCo going out to 2025, and you can see them free on our platform here..

Before you take the next step you should know about the 3 warning signs for StoneCo (1 can't be ignored!) that we have uncovered.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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