StoneCo vs. Block: Which Fintech Stock is a Smarter Buy for 2025?

Brazil-based StoneCo STNE and U.S.-headquartered Block XYZ are two standout fintech players in 2025. Both companies operate integrated payment and financial service platforms tailored for small- and medium-sized merchants.StoneCo is off to a strong start this year with first-quarter adjusted earnings beating the Zacks Consensus Estimate by 6.3% and improving 17.2% year over year. Effective repricing execution and lower average funding spreads fueled a 19% increase in gross profit, reinforcing the company’s disciplined approach to profitability.Block, on the other hand, posted a 28% increase in adjusted operating income and a 15% rise in adjusted EBITDA in the first quarter of 2025. Its Square segment delivered a 9% jump in gross profit, supported by GPV growth and broader banking product adoption. Strategic investments in AI, upmarket seller acquisition and field sales highlight the company’s focus on innovation and scale.So, which fintech stock is better positioned to deliver an upside in 2025, StoneCo with its strong regional execution, or Block with its global innovation strategy? Let’s take a closer look.Year to Date, STNE Outperforms XYZ, Industry and S&P 500 IndexYear to date, StoneCo shares have surged 67.3%, significantly outpacing the Internet-Software industry’s 14.7% gain and the S&P 500’s 0.8% rise. In contrast, Block shares have declined 27.3% during this period, mainly weighed down by weaker-than-expected Cash App performance.YTD Share ComparisonImage Source: Zacks Investment ResearchStoneCo Emerges as a Compelling Fintech Investment in 2025StoneCo Displays Strong Growth Momentum, Outpaces 2025 Guidance in Q1: StoneCo reported 19% year-over-year revenue growth in the first quarter of 2025, driven by strong performance across its payments, financial services, and software segments. Repricing initiatives and resilient client demand lifted Financial Services revenues by 20%, while Software revenue rose 11% on the back of a growing client base and larger average ticket sizes.Earnings also reflected solid operational execution, with adjusted EPS up 17.2% and adjusted basic EPS surging 36% year over year. Gross profit climbed 19%, supported by repricing, lower funding spreads, and disciplined cost control, enabling margin expansion despite macroeconomic headwinds.The company has already exceeded key 2025 targets, with first-quarter gross profit and basic EPS growth outpacing full-year guidance, underscoring strong momentum and the effectiveness of its cash sweep funding strategy.Image Source: Zacks Investment ResearchDisciplined Capital Deployment and Robust Shareholder Returns: Having identified R$3 billion in excess capital at the close of 2024, StoneCo has already returned approximately R$1 billion year to date through aggressive share repurchases. In first-quarter 2025 alone, StoneCo repurchased R$843 million worth of shares, contributing to a total of R$2.4 billion in buybacks over the past 12 months, driving a 12% distribution yield. The company also launched a new R$2 billion share repurchase program.Block: A Strong Long-term Player TooStrong Momentum Across Square and Cash App Ecosystems: Square is regaining market share, with gross profit up 9% year over year and gross payment volume growing 8.2% on a constant currency basis. This reflects Block’s effective product development and go-to-market strategies, including field sales, upmarket seller acquisitions and strategic partnerships.Cash App is set for network expansion, despite a soft quarter due to temporary tax refunds and spending shifts. Block is focusing on user growth among teens and families, while scaling Cash App Borrow after receiving FDIC approval for nationwide lending — a move expected to drive broader eligibility and better unit economics starting in the third quarter of 2025.Block is also unlocking new revenue streams. “Cash App Afterpay,” a retroactive BNPL feature launched in February, is gaining early traction. Meanwhile, its Proto division plans to launch Bitcoin mining chips and systems in the second half of 2025, marking a bold step into digital asset infrastructure.Image Source: Zacks Investment ResearchDisciplined Financial Management and Shareholder Return: XYZ continues to demonstrate strong financial execution and discipline, with adjusted EBITDA rising 15% and adjusted operating income increasing 28% year over year. The company generated $1.53 billion in adjusted free cash flow over the trailing 12 months, up from $1.07 billion a year ago. In addition, Block is returning capital to shareholders, having repurchased $600 million in stock through April 2025. Management signaled intentions to continue buybacks.Comparing ValuationStoneCo is trading at a forward 12-month price-to-earnings (P/E) ratio of 8.75, above its one-year median of 8.20. Block’s forward earnings multiple sits at 19.79, below its one-year median of 31.86. Meanwhile, both companies appear undervalued when compared with the industry’s forward 12-month P/E of 37.59X. At present, STNE stays discounted compared to both XYZ and the industry.Image Source: Zacks Investment ResearchSTNE: A Compelling Buy Over XYZ NowGiven its robust financial momentum, disciplined cost management, and superior earnings execution, StoneCo, a Zacks Rank #1 (Strong Buy), presents a more compelling investment opportunity compared to Block, which carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.StoneCo has consistently outperformed its own guidance, with first-quarter gross profit rising 19% year over year, exceeding the company’s 14% target. On the other hand, while Block has shown positive signs of product innovation and is regaining momentum in Square, investor sentiment remains mixed due to Cash App’s near-term softness and premium valuation.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report StoneCo Ltd. (STNE): Free Stock Analysis Report Block, Inc. (XYZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks