Is StoneCo Ltd. overvalued or undervalued?

Jun 25 2025 09:19 AM IST
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As of March 18, 2025, StoneCo Ltd. is considered overvalued with a valuation grade shift to risky, reflected by a P/E ratio of 10, a Price to Book Value of 2.03, and negative EV to EBIT, contrasting sharply with peers like BlackLine and DLocal, despite a notable ROE of 19.61%.
As of 18 March 2025, the valuation grade for StoneCo Ltd. has moved from attractive to risky, indicating a significant shift in its perceived value. The company is currently considered overvalued based on its financial metrics. Key ratios include a P/E ratio of 10, a Price to Book Value of 2.03, and an EV to EBIT of -15.55, which suggests that the company is facing challenges in generating earnings relative to its enterprise value.

In comparison to its peers, StoneCo Ltd. has a P/E ratio of 11.49, while BlackLine, Inc. stands at 34.03, highlighting a stark difference in valuation. Additionally, DLocal Ltd., which is rated attractive, has a P/E of 34.04, further emphasizing StoneCo's overvaluation in the current market context. The company's ROE of 19.61% is notable, but its negative ROCE of -11.01% raises concerns about its capital efficiency. Overall, these metrics suggest that StoneCo Ltd. is overvalued in relation to its peers and market conditions.
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