Does XP Inc. (XP) offer a good opportunity for investors?

XP Inc. (NASDAQ: XP) stock jumped 5.11% on Friday to $23.05 against a previous-day closing price of $21.93. With 3.15 million shares changed hands, the volume of the stock remained lighter than its average volume of 4.33 million shares. During the session, the Capital Markets company that operates in wider Financial sector, reached to the highest price of $23.21 whereas the lowest price it dropped to was $22.04. The 52-week range on XP shows that it touched its highest point at $53.08 and its lowest point at $16.97 during that stretch. It currently has a 1-year price target of $36.49.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of XP was up-trending over the past week, with a rise of 14.91%, but this was up by 23.53% over a month. Three-month performance dropped to -2.29% while six-month performance fell -31.76%. The stock lost -45.51% in the past year, while it has lost -19.80% so far this year. A look at the trailing 12-month EPS for XP yields 1.25 with Next year EPS estimates of 7.65. For the next quarter, that number is 1.61. This implies an EPS growth rate of 68.50% for this year and 23.88% for next year. EPS is expected to grow by 18.40% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 78.90%.

Float and Shares Shorts:

At present, 558.87 million XP shares are outstanding with a float of 259.50 million shares on hand for trading. On Jul 14, 2022, short shares totaled 8.56 million, which was 1.53% higher than short shares on Jun 14, 2022. In addition to Mr. Guilherme Dias Fernandes Benchimol as the firm’s Founder & Exec. Chairman, Mr. Thiago Maffra serves as its Chief Exec. Officer.

Institutional Ownership:

Through their ownership of 69.56% of XP’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 27.88% of XP, in contrast to 24.65% held by mutual funds. Shares owned by individuals account for –. As the largest shareholder in XP with 5.90% of the stake, T. Rowe Price Associates, Inc. holds 26,403,989 shares worth 26,403,989. A second-largest stockholder of XP, Harding Loevner LP, holds 16,638,483 shares, controlling over 3.72% of the firm’s shares. Dodge & Cox is the third largest shareholder in XP, holding 16,339,385 shares or 3.65% stake. With a 4.56% stake in XP, the Dodge & Cox International Stock F is the largest stakeholder. A total of 20,397,602 shares are owned by the mutual fund manager. The Fidelity Inv. Trust – Emerging Ma, which owns about 1.81% of XP stock, is the second-largest Mutual Fund holder. It holds 8,107,465 shares valued at 145.61 million. Harding Loevner International Equ holds 1.58% of the stake in XP, owning 7,080,727 shares worth 127.17 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for XP since 11 analysts follow the stock currently. There are 8 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 3 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With XP analysts setting a high price target of $331.41 and a low target of $128.02, the average target price over the next 12 months is $177.97. Based on these targets, XP could surge 1337.79% to reach the target high and rise by 455.4% to reach the target low. Reaching the average price target will result in a growth of 672.1% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. XP will report FY 2022 earnings on 03/21/2023. Analysts have provided yearly estimates in a range of $7.11 being high and $6.23 being low. For XP, this leads to a yearly average estimate of $6.78. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. XP Inc. surprised analysts by -$0.02 when it reported $0.30 EPS against a consensus estimate of $0.32. The surprise factor in the prior quarter was $0.03. Based on analyst estimates, the high estimate for the next quarter is $1.75 and the low estimate is $1.35. The average estimate for the next quarter is thus $1.60.

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