DLocal (DLO) drew fresh attention after its latest financial report, which showed earnings per share of US$0.18 and revenue of US$337.89 million, both ahead of market expectations.

The upbeat earnings release has come alongside a 15.7% 1 month share price return. However, the 90 day share price return of 9.64% and year to date share price return of 6.75% suggest momentum has cooled slightly after a strong 1 year total shareholder return of 54.68%.

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With a recent earnings beat, a 1 year total return above 50%, and an implied 35% upside to analyst targets, the key question now is whether DLocal is still undervalued or if the market is already pricing in future growth.

Most Popular Narrative: 41.7% Undervalued

Compared with DLocal's last close of $13.12, the most followed narrative on the stock suggests a fair value of $22.49, implying a wide valuation gap based on that framework.

The trading narrative for dLocal (DLO), based on the DCF Valuation HatedMoats article, is that the stock is significantly undervalued.

Intrinsic Value (Base Case): $22.49 per share.

According to cracken25, this valuation hangs on a capital light model, strong returns on invested capital and a future profit profile usually reserved for market leaders. Curious which cash flow and margin assumptions have to hold up for that $22.49 figure to make sense, and how they differ from the bear and bull cases.

Result: Fair Value of $22.49 (UNDERVALUED)

However, this depends on assumptions that could change, including pressure on take rates and any impact on returns on invested capital if regulation or competition increases.

Next Steps

The mixed sentiment in this article makes it especially important to review the underlying facts yourself and be ready to act quickly if the situation changes. To better understand what the market currently views as positives, take a closer look at the 4 key rewards

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• Target long term compounding potential by scanning for companies trading below their implied worth using the 58 high quality undervalued stocks.
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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.