DLocal (DLO) Stock May Be 37% Undervalued Following Mobile Wallet Remittance Expansion

DLocal has seen its share price move around over the years, and the current level raises a simple question for you as an investor: Is today's price properly supported by the returns the business earns on the capital it puts to work in its payments network across emerging markets?

• DLocal's share price has fallen 68.0% over the past 5 years, which puts the focus squarely on whether its long run returns on capital can justify where the stock trades now.

• The expanded partnership with Western Union to power mobile wallet remittances in markets like Cameroon can influence how much incremental capital DLocal needs to invest and how efficiently those funds translate into future cash flows.

• If you'd rather focus on earnings, this one's for you. See why DLocal's 21.5x P/E tells a different valuation story .

The stock's next move may depend on whether DLocal's current price fairly reflects the returns it earns on its capital today and can reasonably sustain over time.

To see how this same question about the returns a business earns on its capital plays out across other companies, scan through 34 high quality undervalued stocks .

Is DLocal Still Cheap on Excess Returns?

The Excess Returns model starts by asking how much profit DLocal can earn on each dollar of equity after covering its cost of capital. On the inputs here, the business is expected to generate stable EPS of $1.33 per share against a cost of equity of $0.28 per share, which implies excess return of $1.05 per share from those future earnings. That is built on an average Return on Equity of 42.22% and a current book value of $1.87 per share, rising toward a stable book value estimate of $3.15 per share.

Those economics suggest the model sees DLocal creating value above its funding cost. The output indicates this translates into an estimated intrinsic value substantially above the current share price of $15.18. Because the expanded Western Union mobile wallet partnership supports more volume on an existing platform rather than a large immediate capital build, it helps explain why the market may be pricing the stock below what these excess return assumptions support. To see how far the Excess Returns valuation sits from today's market price, follow through to the full calculation. Find out what DLocal could be worth using our Excess Returns estimate .

The DLocal Narrative: What Would Justify Today's Price?

Narratives pick up where DLocal's valuation puzzle leaves off. They spell out the mix of future growth, margins and earnings the business would need to justify a meaningfully higher or lower price than today. Each one treats fair value as a specific, followable thesis about DLocal's economics, so you can see how the underlying story holds up over time as new information comes through the Community page.