XP Stock Study (6-24-26)

Posted by Mark on August 11, 2026 at 07:10 | Last modified: June 24, 2026 08:43

I recently did a stock study on XP, Inc. (XP, $15.72).

M* writes:

     > XP Inc is a Cayman Island-based technology-driven
     > financial services platform. It is a provider of low-fee
     > financial products and services in Brazil. The company
     > evaluates its business through a single segment such
     > as monitoring operations, making decisions on fund
     > allocation, and evaluating the performance. It generates
     > revenue through the Brokerage commission. Geographically,
     > the company derives maximum revenue from Brazil and
     > also has its presence in other countries.

Since public trading [as sponsored ADR] begins in 2019, this medium-size company grows sales and earnings at annualized rates of 8.0% and 20.6%. Lines are up, mostly straight, and parallel. Value Line (VL) gives an Earnings Predictability score of 90. Shares outstanding increase 3.9% (0.6%/year).

Since 2019, PTPM leads peer and industry averages while increasing from 42.9% to 68.4% (’25) with a last-5-year mean of 63.1%. ROE leads peer and industry averages despite falling from 52.1% to 20.9% (’25) with a last-5-year mean of 22.0% (shareholder equity consistently positive with 10.5% CAGR). Debt-to-capital is greater than peer averages and less than the industry while ranging from 66.2% in ’21 to 85.2% in ’24 with a last-5-year mean of 72.8%.

Quick ratio is 0.55 and interest coverage 11.0 per M* who gives an alarming D grade for Financial Health (per BI website). VL gives a B+ grade for Financial Strength and a debt ratio of 0.16, which is generally regarded as very safe (per Google AI).

With regard to sales growth:

• YF gives YOY ACE 10.9% and 13.4% for ’26 and ’27 (based on 9 analysts).
• Zacks gives YOY ACE 19.7% and 15.5% for ’26 and ’27 (2 analysts).
• VL projects 8.4% per year from ’25-’30.
• CFRA gives ACE 11.0% YOY and 12.2% per year for ’26 and ’25-’27, respectively (9).

My 8.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 14.6% YOY and 14.7% per year for ’27 and ’26-’28, respectively (based on 12 analysts).
• Nasdaq.com gives ACE 15.0% YOY and 12.9% per year for ’27 and ’26-’28 (3 / 3 / 2 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year CAGR of 15.6%.
• Finviz gives 5-year annualized ACE of 12.5% (1).
• YF gives YOY ACE 10.7% and 12.6% for ’26 and ’27, respectively (5).
• Zacks gives YOY ACE 18.9% and 14.9% for ’26 and ’27 along with 5-year annualized growth of 15.2% (3).
• VL projects 11.3% per year from ’25-’30.
• CFRA gives ACE 11.7% YOY and 12.2% per year for ’26 and ’25-’27 (5).

My 10.0% forecast is below the long-term-estimate range (mean of four: 13.6%). Initial value is ’25 EPS of $1.74/share rather than 2026 Q1 EPS of $1.83 (TTM).

My Forecast High P/E is 11.0. Since 2019, high P/E decreases from 75.7 in ’16 to 11.9 (’25) with last-5-year mean of 24.9 and a last-5-year-mean average P/E of 18.1. I am below the range.

My Forecast Low P/E is 6.0. Since 2019, low P/E ranges from 60.0 to 6.2 (’25) with a last-5-year mean of 11.3. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $10.40 is default based on initial value from above: 33.8% less than previous close and 29.7% less than the 52-week low.

Since dividend inception, payout ratio (PR) is 90.6% in ’23, 48.8% in ’24, and 10.1% in ’25. My conservative forecast is 5.0%.

These inputs land XP in the HOLD zone with a U/D ratio of 2.8. Total Annualized Return (TAR) is 14.9%.

PAR (using Forecast Average—not High—P/E) of 9.3% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only three other studies done in the past 90 days (too small a sample for anything but anecdotal comparison), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 12.0%, 11.0%, 18.0, 8.1, and 36.6%, respectively. I am lower across the board. VL projects a future average P/E of 14.0 that is greater than MS (13.1) and much greater than mine (8.5).

MS high / low EPS are $3.08 / $1.70 versus my $2.80 / $1.74 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $3.00 is in the middle.

MS LSPF of $10.80 implies a Forecast Low P/E of 6.4: less than the above-stated 8.1. MS LSPF is 21.6% less than the default $1.70/share * 8.1 = $13.77 resulting in more conservative zoning. MS LSPF is still 3.9% greater than mine, though.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also supporting this assessment is the lowest TAR of three MS studies exceeding mine by 5.0% per year.

With regard to valuation, PEG is 0.5 and 0.8 per Zacks/M* and my projected P/E: undervalued. Relative Value is quite low at 0.5 [(current P/E) / 5-year-mean average P/E]. M* reports stock at a 7% discount.

I hope more in the community study this stock so we can accrue a better understanding of some quirkiness including a D Financial Health grade (with such a low debt ratio?), a 1x cash flow multiplier [per VL, the lowest of three categories its covered stocks fall into is “Low Multiples (4x to 10x cash flow): Applied to slower-growth, highly capital-intensive, or mature businesses.” XP is not capital-intensive; it operates an asset-light, technology-driven business model. It has been around for 25 years but functions as a modernized, high-growth fintech], and MarketWatch’s 2025 stated EPS that is only 18% of 2026.

Per U/D, XP is a BUY under $15.50/share. Given a forecast high price ~$31, [30.8 / ((14.37 / 100 ) +1 ) ^ 5] ~ $15.70 would meet the BetterInvesting® TAR criterion.

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