Stoneco’s Earnings Call: Rising Through Tough Times

Stoneco ((STNE)) has conducted its Q3 earnings call. Continue reading for the key takeaways from the call.

Introducing Your ETF AI Advisor

• Discover how ‘ETF AI Analyst can assist you in making more informed investment choices
• Explore ETFs – users adoreand observe what revelations theETF AI Analystdiscloses information about those you follow.

Stoneco’s latest earnings conference revealed a scenario of significant growth balanced with concern stemming from macroeconomic issues. The firm announced impressive gains in earnings per share (EPS), steady capital distributions, and improvements in return on equity (ROE), income, and banking activities. Nonetheless, the call also pointed out obstacles like a tough macroeconomic climate, higher financial costs, and an increase in non-performing loans (NPLs). In general, the outlook was optimistic, indicating a path of expansion while acknowledging external economic difficulties.

Strong EPS Growth

Stoneco achieved notable growth in its adjusted basic earnings per share, reaching BRL 6.9 per share, reflecting a 37% rise so far this year. Furthermore, the EPS increased by 31% compared to the previous year, reaching BRL 2.57 per share. This improvement highlights the company’s solid financial results and its capacity to create value for investors.

Consistent Capital Returns

The organization has shown a dedication to returning funds to its shareholders, having distributed BRL 2.8 billion in the past 12 months. This represents approximately a 10% return for the period, with 74% of the BRL 3 billion in additional capital already returned by the end of October. This ongoing distribution underscores Stoneco’s emphasis on rewarding its investors.

ROE Expansion

Stoneco saw substantial growth in its return on equity (ROE), with a consolidated ROE increase of 8 percentage points compared to the previous year, reaching 24%. The ROE from ongoing financial services also improved by 4 percentage points, hitting 33%, reflecting robust profitability and effective utilization of equity.

Revenue and Income Growth

Although dealing with issues like reduced floating revenues, Stoneco’s overall revenue and income increased by 16% compared to the previous year, reaching BRL 3.6 billion. This increase shows the company’s capability to sustain good performance despite difficult economic conditions.

Banking Operation Expansion

Stoneco’s financial services experienced substantial expansion, as the number of active clients rose by 22% compared to the previous year, totaling 3.5 million. Additionally, customer deposits increased by 32% from the prior year, amounting to BRL 9 billion, reflecting the company’s growing presence in the banking industry.

Credit Portfolio Growth

The company’s overall credit portfolio increased by 27% from the previous period, reaching BRL 2.3 billion, while sustaining high credit quality. This expansion in the credit portfolio reflects positively on Stoneco’s capacity to efficiently handle and grow its lending activities.

Macro Environment Challenges

Stoneco recognized the ongoing difficulties brought about by the macroeconomic conditions, which have impacted its results. The company mentioned decreased same-store sales and a slowdown in annual growth, indicating the larger economic challenges.

Increased Financial Expenses

Financial costs increased by 28% compared to the previous year, greatly affecting revenue ratios. This rise demonstrates the financial challenges the company is encountering in today’s economic environment.

Rising NPLs

The company noted an increase in non-performing loans (NPLs), with NPLs ranging from 15 to 90 days at 3.12% and those exceeding 90 days at 5.03%. This highlights the development of the loan portfolio and certain client payment issues, pointing to potential problems in credit management.

Forward-Looking Guidance

During the earnings call, CEO Pedro Zinner shared future expectations, noting a 15.2% increase in adjusted gross profit so far this year despite the effects of an ongoing stock repurchase initiative. The company continued to manage its capital wisely, distributing substantial capital back to investors and stressing financial responsibility and the creation of long-term value. Zinner emphasized a commitment to efficient operations in the face of difficult economic conditions.

In conclusion, Stoneco’s earnings call demonstrated an optimistic perspective along with robust financial results, highlighted by improvements in EPS, capital distributions, and banking activities. Nevertheless, the company maintains a cautious stance because of macroeconomic difficulties, higher financial costs, and growing non-performing loans. The forward-looking statements underscore a dedication to careful management and the creation of long-term value, setting Stoneco up for ongoing success despite the tough conditions.

Disclaimer & DisclosureReport an Issue