Index additions and sentiment shifts around DLocal

DLocal (NasdaqGS:DLO) has just been added to a wide set of Russell indices. This development coincides with stronger investor interest, upbeat analyst coverage, and higher expectations for its emerging markets payments business.

This combination of index inclusions and research attention has arrived alongside active insider trading plans and options for insiders to convert Class B into Class A shares. This gives investors several moving parts to track at once.

After a spell of weaker long term total shareholder return, the recent 35.7% 1 month share price return and 18.7% 7 day share price return suggest momentum in DLocal is rebuilding as index additions and analyst upgrades refocus attention on its emerging markets payments exposure.

If this activity has you looking beyond a single stock, it could be a useful moment to scan other payments and fintech plays connected to AI infrastructure by checking out the 52 AI infrastructure stocks

After a 35.7% 1 month bounce and fresh index inclusion, DLocal now sits at about $15.25, with some valuation tools flagging a discount. Does the current set up still skew the risk reward toward buyers?

Most Popular Narrative: 12.1% Undervalued

With DLocal last closing at $15.25 against a most-followed fair value of $17.35, the narrative currently sketches out upside that rests on volume growth, margin expansion, and capital returns working together.

dLocal's rapid expansion of its solution set (SmartPix for Pix, Buy Now Pay Later partnerships, stablecoin payment infrastructure) and continued onboarding of new alternative payment methods position it to benefit from accelerating digitization of payments in emerging markets, supporting sustained top-line growth and potential for higher take rates on new products, which is positive for revenue and gross margin.

Read the complete narrative. Read the complete narrative.

Curious what sits behind that fair value for DLocal? The narrative leans on fast compound growth, firmer margins, and a future earnings multiple that assumes the model keeps scaling. Want to see which specific revenue and profit paths have to play out for those numbers to hold up?

Result: Fair Value of $17.35 (UNDERVALUED)

However, DLocal’s story can still be knocked off course if heavy reliance on top global merchants or tighter emerging market regulation begins to have a greater impact than expected.

Another view on DLocal’s valuation

While the narrative fair value for DLocal comes out at $17.35, our DCF model suggests a higher figure of $23.43, with the stock at $15.25. That gap points to a much larger implied upside on future cash flows, so which signal should matter more for you right now?

Next Steps

If the bullish tone around DLocal’s potential has caught your attention, consider reviewing the data while it is current and pressure test the optimism against your own view using the 3 key rewards.

Looking for more investment ideas beyond DLocal?

Do not stop with DLocal alone. Broaden your watchlist now, or you risk missing other opportunities that could better match your goals and risk comfort.

• Target potential mispricings by scanning companies that combine quality with attractive valuations using the 41 high quality undervalued stocks.
• Strengthen the income side of your portfolio by reviewing stocks that appear built for consistent payouts through the 8 dividend fortresses.
• Protect your downside by focusing on businesses assessed with more resilient profiles via the 74 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.