dLocal Ltd (DLO) Stock Analysis and Metrics

Sector: Technology Industry: Software - Infrastructure CIK: 0001846832

P/B 7.97

P/E 23.52

P/S 4.19

Market Cap 4.02 Bn

ROIC (Qtr) 31.27

Div Yield % 3.69

Rev 1y % (Qtr) 52.06

Total Debt (Qtr) 66.79 Mn

Debt/Equity (Qtr) 0.13

About

dLocal Ltd, a company known by its ticker symbol DLO, operates in the financial technology industry, focusing on payment processing and foreign exchange services for businesses and consumers across the globe. The company's main business activities include facilitating cross-border transactions, enabling merchants to accept payments from customers in various countries, and providing foreign exchange services to individuals and businesses. In essence, dLocal's primary role is to simplify the process of cross-border transactions, making it easier...

dLocal Ltd, a company known by its ticker symbol DLO, operates in the financial technology industry, focusing on payment processing and foreign exchange services for businesses and consumers across the globe. The company's main business activities include facilitating cross-border transactions, enabling merchants to accept payments from customers in various countries, and providing foreign exchange services to individuals and businesses.

In essence, dLocal's primary role is to simplify the process of cross-border transactions, making it easier for businesses to expand their reach into international markets. They achieve this by offering payment processing solutions, foreign exchange services, and merchant acquiring services. These offerings cater to a diverse customer base, including merchants, banks, and other financial institutions, as well as individual consumers.

The company generates revenue through its payment processing and foreign exchange services. These services encompass payment facilitation, payment aggregation, and foreign exchange transactions. Notably, the payment processing segment is a critical component of dLocal's business, facilitating payments from customers in over 40 countries and territories. This segment includes payment facilitation, payment aggregation, and payment gateway services, which allow merchants to accept payments both online and offline.

On the other hand, the foreign exchange segment facilitates currency exchanges for individuals and businesses. This segment includes spot transactions, forward contracts, and options, designed to streamline cross-border transactions.

dLocal's competitive advantage lies in its ability to provide payment processing and foreign exchange services across multiple countries and territories. This capability sets the company apart from its competitors, offering a comprehensive solution for businesses looking to expand globally.

The company's customers are spread across various countries and territories worldwide, including emerging markets such as Brazil, Nigeria, and Egypt. These customers primarily consist of merchants, banks, and other financial institutions, as well as individual consumers.

In terms of its product and service brands, dLocal offers a range of solutions under its payment processing and foreign exchange segments. However, specific brand names are not explicitly mentioned in the provided document.

Stock Price Chart

Analysis

Pros

Strong operating cash flow of 167.20M provides robust 2.50x coverage of total debt 66.79M, indicating excellent debt servicing capability and financial flexibility.
Healthy cash reserves of 604.47M provide 9.41x coverage of short-term debt 64.23M, demonstrating strong liquidity position and minimal refinancing risk.
Operating cash flow of 167.20M provides exceptional 8799.84x coverage of minority interest expenses 19000, showing strong core operations.
Strong tangible asset base of 1.34B provides 20.02x coverage of total debt 66.79M, indicating robust asset backing and low credit risk.
Robust free cash flow of 165.09M exceeds capital expenditure of 2.11M by 78.35x, indicating strong organic growth funding capability.

Cons

Operating cash flow of 167.20M barely covers its investment activities of (10.69M), with a coverage ratio of -15.64, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Investment activities of (10.69M) provide weak support for R&D spending of 29.81M, which is -0.36x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
Tax assets of 5.43M provide limited offset against tax liabilities of 18.57M, which is 0.29x, indicating potential future cash flow pressure from tax obligations.
Other current assets of 17.33M provide weak coverage of payables of 816.73M, which is 0.02x, suggesting potential working capital stress in near term.
Fixed assets of 7.33M showing 0.32x ratio to depreciation of 22.72M indicates aging infrastructure requiring significant near-term capital investment.

Peer Comparison

Companies in the Software - Infrastructure

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	MSFT	Microsoft Corp	3,542.10 Bn	33.76	12.06	60.56 Bn
2	ORCL	Oracle Corp	533.93 Bn	34.61	8.75	124.39 Bn
3	PLTR	Palantir Technologies Inc.	437.56 Bn	399.47	112.31	0.24 Bn
4	PANW	Palo Alto Networks Inc	125.16 Bn	112.03	13.10	0.35 Bn
5	CRWD	CrowdStrike Holdings, Inc.	120.85 Bn	-384.67	26.47	0.82 Bn
6	SNPS	Synopsys Inc	71.69 Bn	35.89	11.14	15.14 Bn
7	NET	Cloudflare, Inc.	67.84 Bn	-658.43	33.70	3.50 Bn
8	FTNT	Fortinet, Inc.	63.33 Bn	33.80	9.66	1.00 Bn

Industry Comparisons

Current Valuation

Metric	Value	Industry
EV to Assets	2.56	2.56
EV to Cash from Ops.	21.55	38.32
EV to Debt	53.96	-11.37
EV to EBIT	14.88	-12.79
EV to EBITDA	16.22	7.72
EV to Free Cash Flow [EV/FCF]	21.83	24.22
EV to Market Cap	0.90	0.58
EV to Revenue	3.75	-35.00
Price to Book Value [P/B]	7.97	3.74
Price to Earnings [P/E]	23.52	-18.61

Dividend Metrics

Metric	Value	Industry
Dividend Coverage Ratio	0.00	-0.30
Dividend Payout Ratio %	87.50	2.69
Dividend per Basic Share	0.53	0.10
FCF Dividend Payout Ratio %	93.42	1.67
Interest Coverage	6.49	-13.15

Growth Metrics

Metric	Value	Industry
Capex Growth (1y) %	-67.62	-404.11
Cash and Equivalents Growth (1y) %	7.84	226.02
Dividend Growth (1y) %	0.00	-0.27
EBIAT Growth (1y) %	3.36	31.15
EBITDA Growth (1y) %	42.75	49.02
EBIT Growth (1y) %	1.04	25.85
EBT Growth (1y) %	40.15	17.82
EPS Growth (1y) %	46.34	70.69
FCF Growth (1y) %	-6.74	295.45
Gross Profit Growth (1y) %	32.06	49.96

Liquidity Ratios

Metric	Value	Industry
Asset Utilization Ratio	0.68	0.68
Cash Payout Ratio	0.00	0.02
Cash Ratio	0.67	1.21
Current Ratio	1.46	2.57
Debt to Equity Ratio	0.13	-0.93
Interest Cover Ratio	6.49	-13.15
Times Interest Earned	6.49	-13.15

Profitability

Metric	Value	Industry
EBITDA Margin %	27.60	-544.82
EBIT Margin %	25.22	-197.78
EBT Margin %	21.34	-602.74
Gross Margin %	38.60	52.06
Net Profit Margin %	17.80	-605.52

dLocal Ltd (NASDAQ: DLO)