- Several Brazilian Fintech companies have recently opted to trade on the US stock exchange.
- So, we decided to delve deep and analyze these companies using insights from InvestingPro.
- In this article, we will discuss the top five companies you can consider investing in for exposure to the fintech space.
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- Fair Value: $10.02 (-13.2%)
- Analyst Target: $12.15
- Financial Health Score: 4
- Market Cap: $55.05 billion
- Fair Value: $24.75 (+48.7%)
- Analyst Target: $19.51
- Financial Health Score: 4
- Market Cap: $5.14 billion
- Fair Value: $34.41 (+42.8%)
- Analyst Target: $30.51
- Financial Health: 2.69 (C)
- Market Cap: $13.2 billion
- Fair Value: $22.52 (+74.6%)
- Analyst Target: $16.20
- Financial Health Score: 4
- Market Cap: $4.07 billion
- Fair Value: $7.28 (+30%)
- Analyst Target: $5.70
- Financial Health Score: 3
- Market Cap: $2.25 billion
Recently, several Brazilian fintech companies chose to go public on Wall Street, opting to trade on either the NYSE or Nasdaq for reasons like liquidity, visibility, security, and low volatility.
Using InvestingPro's advanced tools, we analyzed these companies to determine which one stands out the most. We focused on the top five in terms of market cap.
1. Nubank
Nubank (NYSE:NU) stands out as a well-known Brazilian company internationally, largely due to its investments from Warren Buffet. It has also established itself as one of Brazil's most popular banks.
While its P/L ratio of 55x may seem high, it's actually favorable compared to the sector's short-term profit growth. Moreover, profits are expected to continue growing this year.
Notably, the bank's Leveraged Free Cash Flow and Operating Revenue show strong growth, indicating solid financial health.
Source: InvestingPro
However, two analysts have recently lowered their projections for the company. Additionally, Nubank's short-term debt surpasses its net assets. Among the five fintechs listed here, Nubank is the only one considered expensive by InvestingPro.
2. StoneCo
StoneCo (NASDAQ:STNE) known for its card machines, boasts several positive aspects. These include a perfect Piotroski score of 9 out of 9 and projected profit increases for the year.
Stone has also been actively repurchasing shares, a move typically well received by the market. However, it does not pay dividends to shareholders.
Source: InvestingPro
Regarding financial health, Stone's recent trends in profit, debt, and revenue have been positive, with performance slightly above average.
The Return on Invested Capital over the past two years stands at a favorable 17.5%, with a remarkable growth rate of 101.0% during the same period. Additionally, InvestingPro suggests there is potential for more than a 40% increase in the share price.
3. XP
Xp Inc (NASDAQ:XP), a leading broker in Brazil, was a pioneer in making investments popular here. Profitability has remained strong in recent times, and the company is actively buying back shares in the market.
However, the high P/L ratio of 17x in relation to short-term results is worth noting, and they do not pay dividends to shareholders.
Source: InvestingPro
Financial health is slightly below average, but not a cause for concern. The company has been consistently generating high revenue, maintaining net profit, and experiencing cumulative cash flow growth in recent years.
Moreover, there is over 40% upside potential at the fair price.
4. PagSeguro
PagSeguro (NYSE:PAGS), a significant player in payment management and card machine services, shines with the strongest Financial Health among all companies listed.
With an ROIC above 30.0%, it stands out in the sector, both presently and over recent years.
Source: InvestingPro
The company scores excellently across Cash Flow (3.08), Growth (3.25), Profitability (3.59), and Relative Value (3.47), contributing to its positive outlook.
Analysts are revising their projections upward for the next results, anticipating higher profits as the company also engages in share repurchases. Additionally, PagSeguro boasts the highest upside potential on the list, nearly 70.0%.
5. Inter
Inter (NASDAQ:INTR) initially went public on B3 but shifted to trading solely on Nasdaq in 2022. Leading analysts predict increased sales and profits for the company in 2024.
Source: InvestingPro
Despite delivering high returns in recent months, Inter, also known as Roxinho, does not distribute dividends. However, it faces challenges such as low-profit margins and high valuation multiples.
One of Inter's financial strengths lies in its growth in earnings per share and operating profit over recent years. Analysts suggest that the bank still has an upside potential of more than 20% in the medium term.
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Disclaimer: The author holds long positions in Paypal, S&P 500, and Nasdaq. This article was written for informational purposes only; it does not constitute a solicitation, offer, advice, counseling or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investoR.