Why StoneCo Stock Surged This Week

Core Insights - StoneCo's stock rose 14.2% this week due to better-than-expected quarterly results [1] - The company reported fourth-quarter sales of 3.61 billion Brazilian real (approximately $636 million), surpassing analyst expectations [2] - Non-GAAP earnings per share were$0.40, exceeding the average analyst target by $0.06 [2] Financial Performance - Revenue increased approximately 11% year-over-year in Q4, while adjusted earnings per share rose about 47% [3] - Total payment volumes for small and medium-sized business customers grew by 22% compared to the prior year [3] - The company is rapidly scaling its credit business, contributing to sales growth [3] Market Outlook - Despite the recent stock rally, StoneCo's stock is down roughly 34% over the past year due to macroeconomic pressures in Brazil [4] - Inflation in Brazil is beginning to cool, which may lead to improved business results and stock performance for StoneCo [5] - The stock is currently trading at approximately 8 times this year's expected earnings, indicating it may be undervalued [5]