DLocal

DLocal Ltd receives a 4-star quantitative star rating, reflecting our opinion that this share class offers a somewhat attractive opportunity for investors. The stock currently trades at a 13% discount to our quantitative fair value estimate of $16.60 per share; however, some caution is warranted due to this estimate's medium uncertainty rating.

The company's solid growth increases our estimated valuation. Consistent revenue and earnings growth indicates a company's potential for increased market share and profitability. For example, the firm's revenue 3-year growth of 35.1% lies in the top 10% compared with peers globally. Robust trailing three-year revenue growth portends a favorable future trajectory, which contributes to our view that shares are cheap.

On a different note, the firm's valuation metrics are potentially concerning. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's book value yield of 13.4%, for example, sits in the bottom 20% compared with global peers. The market value of this company's shares looks expensive relative to the book (accounting) value of equity, which, despite our favorable price/fair value ratio, is a negative attribute.

The narrow moat rating for this company indicates investors can expect it to generate 10 years or more of excess returns on capital due to its respectable competitive advantages. Its moat is bolstered by its strong financial health, which indicates low near-term bankruptcy risk.