StoneCo walked into this earnings print as a heavily discounted fintech stock, trading on a P/E of 3.2x and already down double digits over the past month. The market still hit it again, with the share price falling 6.6% today. That reaction sits awkwardly next to trailing net profit margin of 26.8% and earnings that rose strongly over the last year.

The real headline is not revenue volume or client count. It is the tug of war between those fat margins and the pressure from weak interest coverage that still hangs over StoneCo’s balance sheet. The rest of this report unpacks that tension.

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Q2 2026 Earnings Summary

• Total Revenue (TTM to Q2 2026): BRL 13,535.522m vs. BRL 12,085.777m TTM to Q1 2025 (up approximately 12%)
• Net Income from Continuing Operations (TTM to Q2 2026): BRL 3,645.658m vs. BRL 2,182.842m TTM to Q1 2025 (up approximately 67%)
• Basic EPS (TTM to Q2 2026): BRL 14.01 vs. BRL 7.40 TTM to Q1 2025 (up approximately 89%)
• Net Profit Margin (TTM to Q2 2026): 26.8% vs. 18% prior year TTM (improved margin profile)

Tired of staring at dense tables of margins, earnings and balance sheet figures for StoneCo? Get the full picture of how those pieces fit together in an easy visual format with our company report for StoneCo.

StoneCo’s Bull Case Hinges On Banking And Credit Milestones

Bullish investors argue StoneCo can shift from a pure payments player to a full “bank for entrepreneurs” with deeper banking and credit relationships that support earnings quality. This quarter shows partial delivery on that script. The new brand positioning and integrated ecosystem message are out in the market. Banking traction is real, with retail deposits at BRL 10.8b and a funding cost at about 85% of CDI, which is a key milestone for building lower cost funding.

The bullish story also leans on credit as a growth engine rather than a drag. Credit revenue rose about 14% and the portfolio reached roughly BRL 3.8b, with government backed lines and credit cards scaling. That fits the thesis of broader product penetration across StoneCo’s merchant base. However, the still high 21.5% cost of risk and higher provisions show the credit engine is not yet running on the clean terms bulls would ideally want.

Compare StoneCo’s progress on deposits, funding costs and credit growth with what the street is signaling. See the consensus price target analysis for StoneCo to check how closely analyst targets line up with this thesis.

StoneCo Bears See Credit Quality Concerns Confirmed

The core bearish worry on StoneCo is that credit growth and Brazilian SMB exposure would erode earnings quality and make profits harder to rely on. This quarter gives that view some backing. The credit book sits near BRL 3.8b and provisions of BRL 188m drove a cost of risk of 21.5%. Management flagged higher non performing loans and later stage delinquencies, with several large tickets going bad and some clients entering bankruptcy protection. The coverage ratio slipped to 204%, which reduces the cushion just as stress surfaces in the dedicated desk. A BRL 200m allowance for a liquidated payments issuer adds another non recurring hit tied to counterparties in the financial system. Revenue and EPS still hold up, but the mix of larger credit exposure, high risk costs and thinner coverage means the bear case around earnings quality and volatility has not been cleared.

With interest coverage already flagged as weak and credit costs rising, are these setbacks isolated, or early signs of structural fragility? Review the risk analysis for StoneCo which shows 1 important warning sign

Take Control Of Your Next Move

If StoneCo’s mix of strong margins and balance sheet questions has your attention, register for free with Simply Wall St and add it to a Watchlist to track the share price against fair value and watch how the risk profile evolves. Once you hold the stock, keep your decisions clear with the Portfolio Command Center that cuts through noise and focuses on the key developments that matter to your thesis. For a broader view, use the Community to see how other investors are thinking about StoneCo as new data comes in. By surfacing potential catalysts and risks early, Simply Wall St helps you stay ahead of the market and act with more confidence.

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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.