InvestorsObserver gives StoneCo Ltd (STNE) a strong valuation score of 74 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. STNE currently holds a better value than 74% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.
Metrics Analysis
STNE has a trailing twelve month Price to Earnings (PE) ratio of 107.8 which places it above the histroical average of roughly 15. STNE is currently trading at a poor value due to investors paying more than what the stock is worth in relation to its earnings. STNE's trailing-12-month earnings per share (EPS) of 0.57 does not justify its share price in the market. Trailing PE ratios do not factor in the company's projected growth rate, thus, some firms will have high PE ratios caused by high growth recruiting more investors even if the underlying company has produced low earnings so far.
STNE currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 1.55. The market is currently overvaluing STNE in relation to its projected growth due to the PEG ratio being above the fair market value of 1. STNE's PEG comes from its forward price to earnings ratio being divided by its growth rate. Because PEG ratios include more fundamentals of a company's overall health with additional focus on the future, they are one of the most used valuation metrics by analysts.
Summary
All together these valuation metrics paint a pretty poor picture for STNE at its current price due to a overvalued PEG ratio despite strong growth. The PE and PEG for STNE are worse than the average of the market resulting in a valuation score of 74.
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