DLocal (DLO, Financial) shares have experienced a significant decline, dropping by 29.13% this week. This downturn was spurred by the company's recent earnings report, which fell short of analysts' estimates for both sales and earnings per share.
Despite a strong showing in total payment volume (TPV), which saw a 45% increase in the fourth quarter, the market was less impressed by the modest rise in revenue (15%) and gross profit (6%). Furthermore, the adjusted EBITDA saw a decrease of 7%, with the take rate dropping from 1.2% in Q3 to 1.1% in Q4. This has led to concerns over DLocal's profitability in the near term despite projections for TPV growth of 40% in 2025.
In terms of valuation, DLocal is currently trading at a price of $9.745, which poses a notable deviation from its calculated GF Value of $28.47. According to GuruFocus metrics, DLocal is considered "Significantly Undervalued". Investors can further explore DLocal's GF Value by visiting GF Value.
From a financial standpoint, DLocal displays strong financial strength, with a robust Altman Z-Score of 5.2, indicating good financial health. The company's price-to-earnings (P/E) ratio stands at 24.36, and its price-to-book (P/B) ratio is 6.09, both reflecting the stock’s valuation metrics.
The company's low debt-to-equity ratio of 0.01 and high cash-to-debt ratio of 163.61 underscore its solid balance sheet. However, the recent negative momentum and lack of predictability, with a predictability score of 0, may concern potential investors.
Despite recent setbacks, DLocal's forward-looking revenue growth and expansion plans, particularly in emerging markets, present potential upside. However, investors should weigh these prospects against the current volatility and market sentiment surrounding the stock.
