How the ACI Worldwide partnership reframes DLocal’s role in Latin American payments

DLocal (DLO) stock is back in focus after ACI Worldwide agreed to plug the company’s local payments network into its orchestration platform for Brazil and Mexico, with more Latin American markets scheduled to follow.

For investors, the partnership centers on a practical goal. ACI’s global merchants and fintech clients can use a single connection to access payment options like Pix, PicPay, Mercado Pago and NuPay in Brazil, plus Mercado Pago, OXXO and SPEI in Mexico.

The ACI Worldwide agreement arrives as DLocal’s share price has edged up over the year, with a 90 day share price return of 5.15% and a 1 year total shareholder return of 33.55%. However, the 5 year total shareholder return is still down 69.44%, which suggests momentum has improved recently but remains framed by a weaker long term record.

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DLocal now trades at a clear gap to both analyst targets and intrinsic value estimates. After the ACI Worldwide news and the recent share price move, where does a reasonable fair value actually sit within that spread?

Most Popular Narrative: 71.7% Undervalued

The most followed narrative on DLocal argues that fair value sits well above the last close of $14.41, which puts the ACI news in a very different light.

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. The business earns 37.0% on invested capital on a 20.7% operating margin struck against 36.6% gross margins. Of USD 1.09B in trailing revenue, 40.0% converts all the way to free cash flow, and the balance sheet carries debt at 0.16 times equity, in fact a net cash position of USD 733.78M, which buys the time a levered peer would not have.

Want to see what sits behind that headline valuation for DLocal? The narrative leans on aggressive cash generation, sustained growth and a long runway for compound returns. The exact mix of growth, margins and discounting is where the story really gets interesting.

Result: Fair Value of $50.96 (UNDERVALUED)

However, the DLocal story can shift if growth assumptions in that cash flow model soften, or if regulatory or competitive pressure in key markets starts to bite.

Another View: What DLocal’s P/E Ratio Is Signalling

The cash flow narrative on DLocal points to a large gap to fair value. The picture looks different when you look at the P/E ratio. The stock trades on 22x earnings, which is higher than the US Diversified Financial industry at 16.9x and above a fair ratio estimate of 19.3x, yet below a 42.8x peer average. That mix suggests investors face a trade off. They can pay a somewhat higher price today and support a relatively stronger growth story, or wait to see if expectations cool.

Next Steps

If this all sounds optimistic for DLocal, it is worth checking the numbers yourself and forming your own stance promptly. Start by reviewing 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.