Chicago, IL – April 16, 2025 – Zacks Equity Research shares StoneCo STNE, as the Bull of the Day and RH RH as the Bear of the Day. In addition, Zacks Equity Research provides analysis on — Exxon Mobil Corp. XOM, BP plc (BP) and SLB SLB.
Here is a synopsis of all five stocks:
Zacks Rank #1 (Strong Buy) stock StoneCo is a leading fintech company based in Brazil. The company runs a complete end-to-end cloud-based platform that allows retailers and businesses to accept electronic payments across storefronts and mobile and online channels. Investors can breakdown StoneCo’s business into three primary segments, including:
1. Payment Processing: STNE is the leading provider of point-of-sale payment processing services. Like Block(formerly Square) in the United States, STNE’s technology empowers businesses to accept credit cards, debit cards, and digital wallet payments through its point-of-sale payment solution.
2. Banking Services: StoneCo is much more than a payment processor. Small and medium-sized businesses can use STNE to bank, pay bills, and manage accounts. In addition, because STNE collects transaction data, the company can utilize that data to assess a client’s creditworthiness and offer loans.
3. Software Tools: Like Canadian e-commerce leader Shopify (SHOP), STNE offers a full suite of products that allow businesses to seamlessly conduct e-commerce transactions, analyze their client base, and manage customers.
Stone allows investors to harness the growth of a largely untapped and rapidly growing Brazilian payments market. Brazil is the world’s ninth-largest economy and boasts the largest economy in Latin America, with more than $2 trillion in annual GDP. In Brazil, retail sales are growing, the middle class encompasses roughly 60% of the population, and the country is modernizing into a digital economy.
Unlike the United States, Brazil’s digital payment economy is unsaturated, with roughly only 15% of consumers using digital payments currently. However, Statista predicts that, from 2025 to 2029, the Brazilian digital payment market will register a ~29% compound annual growth rate (CAGR) and grow from ~$300 billion to ~$900 billion.
StoneCO has consistently delivered EPS results above Wall Street expectations. The company has outpaced Zacks Consensus Estimates in twelve of the past thirteen quarters. Last quarter, despite a difficult and uncertain macroeconomic environment, STNE beat Wall Street’s top-and-bottom-line expectations. A positive EPS surprise of 21.88% last quarter suggests that STNE’s business is gaining momentum.
Despite a more than 15% earnings surge, STNE shares are cheap and trade at a forward P/E ratio of ~8x EPS.
STNE’s technical picture echoes its bullish fundamentals. Following last quarter’s earnings results, shares bolted above the 200-day moving average and are breaking out of a multi-week base structure.
StoneCo’s comprehensive fintech platform, consistent earnings outperformance, and attractive valuation allow investors to profit from Brazil’s digital payment transformation.
Zacks Rank #5 (Strong Sell) stock RH, formerly Restoration Hardware, is a high-end home furnishings company based in California. RH is a staple in many malls and shopping centers across the United States and offers a plethora of upscale home goods via its 70 galleries, outlets, catalogs, and websites.
Selling products through its sizable galleries, RH’s product line includes home décor, furniture (including outdoor), bathroom products and bathware, and lighting. While RH’s primary focus is upscale interior products, the company expanded into the hospitality business in 2015, offering a handful of RH branded cafés restaurants, and hotels. RH’s core business is in the US, though it has expanded to Europe and Canada.
The story of Wall Street and the 2025 market thus far is the Trump Administration’s aggressive tariff policy aimed at bringing manufacturing back to the United States, improving trade imbalances, and seeking to achieve better trade deals with other countries. Unfortunately, as of 2024, RH sources ~72% of its products from Asia (including 35% from Vietnam, 23% from China, and the rest from Indonesia and India).
RH addressed supply chain issues earlier this month, saying, “The company has been operating with 25% tariffs from China since the last Trump administration and has successfully resourced the majority of its China production to Vietnam at significantly better than pre-tariff landed China pricing. In addition, the company has successfully resourced a meaningful amount of its China production to its own factory in North Carolina.”
While it’s encouraging to see the company adapt, investor concerns remain. RH is still reliant on China, and moving its supply chain to Vietnam will take time and money. In addition, there is little clarity on trade deals with Indonesia and India at the time of this writing.
Though RH margins are being squeezed due to tariffs, that is not the only concern the company faces. Consumer confidence has been falling recently and RH’s deep-pocketed customer base may temper spending as it waits for a clearer macroeconomic picture to emerge. Gross margins have sunk from more than 50% to 44.8% since 2022.
Maintaining luxury showrooms, paying rent, and upending its supply chain have led to rampant spending of more than $1 billion last year. To make matters worse, the company’s debt is soaring and there is no end to the spending in sight.
RH’s earnings trajectory is moving in the wrong direction for bulls, missing Zacks Consensus Estimates by an average of 103.49% over the past four quarters.
RH shares plunged more than 40% as volume swelled to more than 10x the norm following the company’s latest earnings announcement. Such ugly price and volume action are symbolic of heavy distribution. In addition, RH is carving out a bearish flag pattern.
Luxury home furnishing retailer RH faces several bearish headwinds, including tariff policy, ballooning debt, and margin pressures. A worst-possible Zacks Rank and a bearish chart pattern add to the concern.
We are yet to get first-quarter 2025 results from the energy companies, with the oil-energy sector’s earnings season to start this week. In the meantime, Exxon Mobil Corp. has already offered an early glimpse of how the quarter might have shaped up. As oil and natural gas prices were buoyant in the March quarter, we expect BP plc and SLB to beat on first-quarter earnings.
Per the data from the U.S. Energy Information Administration (“EIA”), the average Cushing, OK WTI spot prices for January, February, and March of this year were $75.74, $71.53 and $68.24 per barrel, respectively. Thus, the overall pricing environment was favorable in the first quarter of 2025, as the breakeven costs of the exploration and production companies in the shale plays are significantly lower.
However, although crude prices were advantageous in the March quarter of this year, the overall prices of the commodity were a bit higher at $74.15, $77.25 and $81.28 per barrel in January, February and March of 2024, respectively. Hence, the oil-energy sector is likely to have generated lower total earnings in the first quarter of 2025 as compared to the prior-year quarter.
Our data suggests that in the March quarter of 2025, the sector will probably generate total earnings of $27.5 billion, lower than $30.5 billion in the first quarter of 2024.
Notably, the pricing scenario for natural gas was not only healthier but also favorable in the first quarter of 2025.
Since the prices of both crude oil and natural gas were favorable for exploration and production activities, upstream energy players will likely report handsome first-quarter results. Oilfield service players will also likely remain in the sweet spot since they help upstream firms set up oil and gas wells effectively.
XOM, one of the largest integrated energy players, recently reported in an SEC filing that it expects its upstream earnings for the March quarter to increase sequentially by as much as $800 million. The company attributed advantageous oil and gas prices for the improvement. Moreover, ExxonMobil expects its Energy Products business unit to witness a sequential improvement of $300-$700 million owing to the changes in industry margins.
With the existence of a number of players in the sector, finding the right energy stocks that have the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
SLB is a leading oilfield service player. As exploration and production activities were favorable, SLB is likely to have witnessed increased demand for its well construction, completions and reservoir characterization activities.
SLB currently has an Earnings ESP of +0.20% and a Zacks Rank of 3. It is slated to report first-quarter 2025 results on April 25.
The company's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 1.78%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
BP, a British energy giant, currently has an Earnings ESP of +9.14% and carries a Zacks Rank #3. Supportive commodity prices are likely to have aided BP. The company is slated to report first-quarter 2025 results on April 29.
However, BP expects its production from upstream operations to be lower sequentially. BP’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, delivering an average negative surprise of 3.04%.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
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Shopify Inc. (SHOP) : Free Stock Analysis Report
StoneCo Ltd. (STNE) : Free Stock Analysis Report
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