DLocal (DLO) drew fresh attention after reporting second quarter 2026 results that included US$399.66 million in sales, higher earnings per share, and updated guidance on total payment volume and gross profit growth.

DLocal’s recent earnings release comes after a mixed period in the market, with the 90 day share price return up 23% but the 1 year total shareholder return still down 7.97%. The latest trading update and higher guidance appear to have revived near term momentum even as longer term holders remain under water.

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After a sharp rebound in DLocal’s share price and upbeat guidance on payment volumes and gross profit, the key question now is whether the current valuation still offers enough potential upside to compensate for the risks.

Most Popular Narrative: 72.2% Undervalued

Compared with DLocal’s last close at $14.17, the most followed narrative pegs fair value at $50.96 per share. That is a sizeable gap that hinges on strong free cash flow and returns on capital.

DLocal trades below the value implied by discounting its own free cash flow. On a two-stage model running 10 years of +25.0% growth fading to a 2.5% terminal rate, discounted at 9.8%, the shares are worth USD 50.96 against a market price of USD 15.24, a 70% discount, or +234% to fair value. 58% of that value sits in the terminal period, which is the honest caveat: the further out the cash flow, the more the answer is a statement about assumptions rather than about this year.

According to J_Tyrader, this DLocal narrative leans heavily on rich free cash flow conversion, high returns on capital and a long runway of compounding cash flows. It raises the question of which specific growth path and margin profile would need to hold up to justify a fair value more than triple the current price.

Result: Fair Value of $50.96 (UNDERVALUED)

However, DLocal still faces clear risks if growth slows faster than expected or if its rich free cash flow margins and returns on capital prove difficult to sustain.

Another View On DLocal’s Valuation

While the user narrative leans on free cash flow and a high fair value, the SWS DCF model is more modest. It points to a fair value of $24.25 per share, which still suggests DLocal is undervalued versus the current $14.17 price. Which set of assumptions do you trust more for the long haul?

Next Steps

With sentiment around DLocal split between cautious and optimistic, this could be a useful moment to review the numbers yourself under different scenarios. To see what current holders are focused on, review the 4 key rewards

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.