StoneCo Ltd. STNE is strategically capitalizing on Brazil’s fast-evolving digital payments landscape by intensifying its focus on the micro, small and medium business (MSMB) segment. In the first quarter of 2025, the company reported 17% year-over-year growth in MSMB total payment volume (TPV), reaching R$119.5 billion, amid effective repricing efforts and expanding product adoption. StoneCo’s active MSMB client base also rose 17% year over year to 4.3 million, indicating robust traction despite a challenging macroeconomic backdrop and higher interest rates.\n\nStoneCo's bundling strategy — offering integrated payments, banking and credit solutions — has proved instrumental in scaling engagement. The proportion of heavy users (clients using three or more financial products) surged to 38% in the first quarter of 2025 from 26% in the prior-year period, reflecting strong cross-sell momentum. Additionally, PIX transactions, which grew 95% year over year, are rapidly replacing traditional debit transactions and generating greater client deposits.\n\nStoneCo projects continued growth with guidance for MSMB TPV to exceed R$670 billion by 2027, representing a 14% CAGR from the 2024 levels. This forecast aligns with management’s shift toward profitability over volume growth, even as broader platform integration and localized sales strategies continue to drive share gains in Brazil’s fragmented payments market.\n\nHow Are STNE’s Peers Doing?\n\nPagSeguro Digital Ltd. PAGS continues to deepen its focus on the MSMB segment, which accounted for 74% of its first-quarter 2025 TPV. MSMB TPV rose 11.2% year over year to R$95.2 billion at PagSeguro, driven by enhanced POS activity. It experienced expansion of SMBs’ active clients and performance. PagSeguro’s strategic shift away from nano-merchants toward higher-value MSMBs supported improved TPV per merchant.\n\nMercadoLibre, Inc. MELI continues its aggressive expansion across Latin America, with standout performance in Argentina, and sustained growth in Brazil and Mexico. In the first quarter of 2025, MercadoLibre’s total payment volume of $58.3 billion was up 43% year over year and 72% FX-neutral. MercadoLibre experienced rising monthly active fintech users (up 30%+ year over year to 64 million) and deepening integration of Mercado Pago. Strategic investments in logistics, credit and UX modernization are fueling ecosystem-wide gains.\n\nSTNE’s Price Performance, Valuation and Estimates\n\nShares of StoneCo have surged 71.5% year to date, outperforming both the broader industry and the S&P 500 Index.\n\nFrom a valuation standpoint, StoneCo shares are cheap, as suggested by the Value Score of B. In terms of forward 12-month P/E, STNE is currently trading at 8.42X, which is below the industry average of 40.18X.\n\nStoneCo’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for 2025 and 2026 EPS has been revised upward over the past week. The Zacks Consensus Estimate for 2025 EPS suggests 10.37% growth year over year, while the same for 2026 calls for a 16.11% jump year over year.\n\nCurrently, StoneCo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.\n\nThis article originally published on Zacks Investment Research (zacks.com).

Is StoneCo's 2027 TPV Target Achievable Amid Rising Competition?

StoneCo Ltd. (STNE) reports 17% YoY growth in MSMB TPV to R$119.5 billion in Q1 2025, driven by repricing, product adoption, and a 38% increase in heavy users. The company projects MSMB TPV to exceed R$670 billion by 2027, despite competition from peers like PagSeguro and MercadoLibre. StoneCo's shares surged 71.5% YoY, with a forward P/E of 8.42X, below industry averages. Zacks estimates suggest 10.37% and 16.11% EPS growth for 2025 and 2026, respectively.