Bullish stock to watch: StoneCo Ltd (NASDAQ: STNE)

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StoneCo Ltd (NASDAQ: STNE) stock rose over 1.8% on March 3rd, 2020 (as of 10:29 am GMT-5; Source: Google finance) after the company posted decent results for the fourth quarter of FY 19. During the year 2019, the company has delivered strong net addition of clients and TPV, while keeping the take rates relatively stable and maintaining high levels of client satisfaction. The company had also successfully started to scale the credit, digital banking and software initiatives, which combined with the client-centric mentality creates a powerful and unique value proposition in the SMB market. In 2019, the company had discontinued investments in the Stone Mais solution ahead of the launch of the partnership with Globo, therefore the company had a slightly negative net addition coming from Stone Mais. Overall, STNE has reported fourth quarter adjusted net income of BRL275 million with 35.1% margin, compared to BRL156 million in the fourth quarter of 2018 and 29.5% margin.

Moreover, from the third to the fourth quarter, the company had multiplied the number of credit clients by 3.2, reached more than 24,000 clients by year-end. Total disbursement at the end of the year stood at BRL290 million, with an outstanding balance of BRL166 million and average maturity ranging between six and nine months. In January 2020, the company had reached almost 29,000 clients using credit, close to BRL200 million of credit portfolio outstanding and over BRL360 million disbursement since inception.

Furthermore, the company reached a total of 495,000 active clients in payments, with net addition of 66,000 clients in the fourth quarter of 2019. The company has also accelerated the TPV growth to 51% year-over-year, reaching a total TPV of BRL40.2 billion in the fourth quarter. The take rate was a healthy 1.8% in the fourth quarter, which is slightly lower than previous quarters. The main reason for that is the effect of the key accounts, which had strong growth in the quarter and presented lower take rates at the same time.

STNE in the fourth quarter of FY 19 has reported the adjusted earnings per share of 21 cents, while the adjusted revenue growth of 47.9 percent to $175.1 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $150 million.

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