Here's Why StoneCo Is on the Rise Today

What happened

StoneCo (NASDAQ: STNE), the Brazilian payments company that was a recent addition to Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) closely watched stock portfolio, is soaring on Tuesday.

As of 11 a.m. EDT, the stock is up by more than 20% and has reached a new all-time high.

So what

To put it mildly, StoneCo's fourth-quarter earnings report crushed the market's expectations. While analysts forecast the company to generate earnings (in U.S. dollars) of $0.13 per share on revenue of $117 million, earnings per share landed at $0.27, more than double what was expected, on $137.6 million in revenue.

Most of the other figures in StoneCo's report were just as impressive. To name a few:

  • Total payment volume increased 74% year over year.
  • Adjusted net margin improved dramatically year over year from 8.4% to 29.5%, mainly thanks to effective expense controls.
  • StoneCo's client roster more than doubled to 267,900 at the end of 2018 from the end of last year.

Now what

In addition to solid numbers, management sounded extremely optimistic. CEO Thiago Piau praised the company's ability to grow at a breathtaking pace while remaining profitable (a rarity in the fintech space), and also discussed its high customer satisfaction ratings.

This was just StoneCo's second earnings report since becoming a publicly traded company in 2018, but these results are setting a very positive tone for investors like Berkshire who participated in StoneCo's initial public offering, as the stock has risen by a staggering 75% since the $24 IPO price.

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Matthew Frankel, CFP owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.