XP Inc.A (XP) Tops Q1 Earnings Estimates

XP Inc.A (XP) reported Q1 adjusted EPS of $0.39, slightly above the Zacks Consensus Estimate of $0.38, but revenues of $740.99 million missed estimates by 4.55%. Despite the earnings beat, revenue declined compared to the year-ago quarter's $818.21 million. The stock has significantly outperformed the S&P 500 year-to-date, but its near-term performance is expected to align with the market, holding a Zacks Rank #3 (Hold) rating.

Analysis

XP Inc. (XP) reported adjusted earnings of $0.39 per share for the quarter ended March 2025, narrowly surpassing the Zacks Consensus Estimate of $0.38 and slightly improving from $0.37 per share in the prior year. This represents a positive earnings surprise of 2.63%, a notable contrast to the previous quarter's significant -72.66% negative surprise when actual earnings of $0.38 fell far short of the $1.39 estimate. Over the last four quarters, XP Inc. has exceeded consensus EPS estimates only once. Concurrently, quarterly revenues of $740.99 million missed the consensus estimate by 4.55% and declined from $818.21 million reported a year ago, although the company has topped revenue estimates three times in the past four quarters. Despite these mixed operational results, XP Inc.'s shares have surged approximately 57.2% year-to-date, significantly outperforming the S&P 500's 1.4% gain. Looking ahead, the estimate revisions trend for XP Inc. is categorized as mixed, contributing to a Zacks Rank #3 (Hold), which suggests the stock is expected to perform in line with the market. Consensus estimates project $0.39 EPS on $803.44 million in revenues for the upcoming quarter, and $1.60 EPS on $3.25 billion in revenues for the current fiscal year. The Financial - Miscellaneous Services industry, to which XP Inc. belongs, is currently positioned in the bottom 45% of Zacks-ranked industries, indicating potential sector-wide headwinds.

Key Decisions for Investors

• Investors should carefully evaluate management's commentary from the earnings call to understand the drivers behind the revenue miss and the outlook for future profitability, especially given the single EPS beat in the last four quarters.
• Given the substantial year-to-date stock appreciation juxtaposed with mixed earnings results, a declining year-over-year revenue, and a Zacks Rank #3 (Hold), it may be prudent to await further clarity on sustained earnings power before increasing positions.
• Monitor upcoming changes to earnings estimates for XP Inc. and the broader Financial - Miscellaneous Services industry performance, as the current bottom-half industry ranking could temper stock performance despite individual company efforts.