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Here's Why StoneCo Is on the Rise Today

By Matthew Frankel, CFP® - Updated Apr 14, 2019 at 11:34AM

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This fintech company's results surprised the market.

What happened

StoneCo (STNE -0.21%), the Brazilian payments company that was a recent addition to Berkshire Hathaway's (BRK.A 0.10%) (BRK.B -0.03%) closely watched stock portfolio, is soaring on Tuesday.

As of 11 a.m. EDT, the stock is up by more than 20% and has reached a new all-time high.

Two workmen looking at laptop in the middle of a workshop.

StoneCo helps small businesses accept payments more efficiently. Image source: Getty Images.

So what

To put it mildly, StoneCo's fourth-quarter earnings report crushed the market's expectations. While analysts forecast the company to generate earnings (in U.S. dollars) of $0.13 per share on revenue of $117 million, earnings per share landed at $0.27, more than double what was expected, on $137.6 million in revenue.

Most of the other figures in StoneCo's report were just as impressive. To name a few:

  • Total payment volume increased 74% year over year.
  • Adjusted net margin improved dramatically year over year from 8.4% to 29.5%, mainly thanks to effective expense controls.
  • StoneCo's client roster more than doubled to 267,900 at the end of 2018 from the end of last year.

Check out the latest earnings call transcripts for the companies we cover.

Now what

In addition to solid numbers, management sounded extremely optimistic. CEO Thiago Piau praised the company's ability to grow at a breathtaking pace while remaining profitable (a rarity in the fintech space), and also discussed its high customer satisfaction ratings.

This was just StoneCo's second earnings report since becoming a publicly traded company in 2018, but these results are setting a very positive tone for investors like Berkshire who participated in StoneCo's initial public offering, as the stock has risen by a staggering 75% since the $24 IPO price.

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Stocks Mentioned

StoneCo Ltd. Stock Quote
StoneCo Ltd.
STNE
$9.33 (-0.21%) $0.02
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$456,500.00 (0.10%) $468.99
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$304.05 (-0.03%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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