Yahoo Finance Industry Analysts Just Made A Substantial Upgrade To Their StoneCo Ltd. (NASDAQ:STNE) Revenue Forecasts
StoneCo Ltd. (NASDAQ:STNE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that StoneCo will make substantially more sales than they'd previously expected. Investors have been pretty optimistic on StoneCo too, with the stock up 28% to R$31.38 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the most recent consensus for StoneCo from its 13 analysts is for revenues of R$3.1b in 2020 which, if met, would be a sizeable 161% increase on its sales over the past 12 months. Statutory earnings per share are expected to be R$2.78, roughly flat on the last 12 months. Previously, the analysts had been modelling revenues of R$2.7b and earnings per share (EPS) of R$2.60 in 2020. The most recent forecasts are noticeably more optimistic, with a solid increase in revenue estimates and a lift to earnings per share as well.
See our latest analysis for StoneCo
Despite these upgrades, the analysts have not made any major changes to their price target of R$163, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic StoneCo analyst has a price target of R$40.56 per share, while the most pessimistic values it at R$23.32. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting StoneCo's growth to accelerate, with the forecast 161% growth ranking favourably alongside historical growth of 41% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% next 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 biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at StoneCo.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential risk with StoneCo, including concerns around earnings quality. You can learn more, and discover the 1 other risk we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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. Thank you for reading.
