StoneCo (NasdaqGS:STNE) opened 2026 with Q1 revenue of R$3.6b and basic EPS of R$7.17, while trailing twelve month revenue stood at R$13.6b and EPS at R$14.00, framing a period where profitability has been firmly positive. Over the past year, the company has seen quarterly revenue move from R$3.2b in Q1 2025 to R$3.6b in Q1 2026, with basic EPS over those quarters ranging between R$1.83 and R$2.49 before stepping up to R$7.17 most recently. For investors, the key question now is how much of this EPS step up reflects lasting margin improvement versus one off factors that may not repeat.

See our full analysis for StoneCo.

With the headline numbers on the table, the next step is to see how this earnings print lines up against the most widely discussed StoneCo narratives, highlighting where the story is reinforced and where expectations may need a reset.

TTM earnings swing to R$3.6b profit

• Over the last twelve months, StoneCo reported net income of R$3.6b and basic EPS of R$14.00, compared with losses in the prior TTM snapshots where EPS ranged from a R$4.60 loss to a R$4.46 loss and net income moved from a R$1.4b loss to a R$1.3b loss.
• For the bullish narrative that expects higher long term profitability, this shift to a R$3.6b profit and TTM revenue of R$13.6b sits alongside the view that a focus on MSMB payments and financial services can keep margins strong. However, it also has to be weighed against analysts’ forecasts that show earnings projected to decline by about 9.8% per year, so investors need to decide whether the current margin profile looks closer to the bullish path or closer to those softer forecasts.
  • Bulls point to five year EPS growth of 29.2% per year and the recent move into sustained profitability as evidence that operating leverage is already working, which lines up with the idea of higher margins from cross selling and digital banking.
  • At the same time, the forecast earnings decline and modest 6.5% expected annual revenue growth challenge the most optimistic case that profitability can keep expanding rapidly from the current TTM base without interruption.

After such a sharp swing back into profit, bullish investors will be watching closely to see if future quarters keep backing their longer term growth story or start to track closer to the softer consensus earnings path. 🐂 StoneCo Bull Case

Q1 net income triples versus late 2025

• Quarterly net income excluding extra items rose from R$605.8m in Q4 2025 to R$1.8b in Q1 2026 on revenue that moved from R$3.5b to R$3.6b, so profit in the latest quarter was roughly 3x the level seen just one quarter earlier even though revenue only added about R$38m.
• Bears highlight risks around competition, regulation and credit quality, and this sudden jump in quarterly profit gives them plenty to question because it comes alongside forecast earnings declines of about 9.8% per year. They can therefore argue that such a steep profit step up may be hard to repeat if transaction growth or pricing power comes under pressure.
  • Cautious investors also point to the company’s high debt level and exposure to small and medium sized businesses as reasons why net income, which has swung from large losses to a R$1.8b quarterly profit, might be more volatile than a single strong quarter suggests.
  • At the same time, the move from multi billion real TTM losses in early 2025 to a R$3.6b TTM profit could be used to question the bearish view that regulatory costs and competition will consistently squeeze margins if the company keeps showing similar profitability in future periods.

For more cautious investors, the mix of a very strong Q1 profit and forecasts calling for earnings pressure makes it important to separate one off items from what looks durable in these numbers. 🐻 StoneCo Bear Case

P/E of 4.1x with DCF fair value at R$58.10

• Based on trailing earnings, StoneCo traded on a P/E of 4.1x compared with a peer average of 9.8x and a US diversified financial industry average of 18x, and the DCF fair value estimate of R$58.10 sits well above the current share price of R$9.61.
• Supporters of the bullish case say this wide gap between the current R$9.61 price and both the DCF fair value and the analysts’ allowed consensus target of R$17.83 reflects the market underestimating earnings durability, while the trailing twelve month profit of R$3.6b and EPS of about R$14.00 are already in the books. However, the mixed outlook that includes forecast earnings declines and a high debt load gives more cautious investors an argument that low multiples may be compensation for those risks rather than a simple mispricing.
  • On one side, the low 4.1x P/E and five year EPS growth of 29.2% per year line up neatly with the bullish idea that the stock is inexpensive relative to both history and peers.
  • On the other side, the slower 6.5% expected revenue growth and projected earnings decline mean the gap to the R$58.10 DCF fair value could close either through future earnings outcomes or through the share price staying low if the market keeps focusing on those risks.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for StoneCo on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With sentiment split between a strong recent earnings picture and flagged concerns around future growth, it makes sense to check the numbers yourself and decide where you stand. To round out your view, take a moment to weigh the 3 key rewards and 2 important warning signs.

See What Else Is Out There

StoneCo’s story now combines a sharp profit recovery with forecasts for earnings to decline about 9.8% per year, alongside concerns around debt and earnings volatility.

If you want more consistent growth profiles and potentially steadier balance sheets than this mix of strong profits and forecast pressure, check out the 66 resilient stocks with low risk scores.

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.