XP (NasdaqGS:XP) Margin Expansion To 29.1% Tests Cautious Growth Narratives

Simply Wall St.02-14

XP (NasdaqGS:XP) just wrapped up FY 2025 with fourth quarter revenue of R$4.8b and basic EPS of R$2.46, framed by trailing twelve month revenue of R$17.8b and EPS of R$9.80 as earnings grew 14.5% over...

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The company has seen quarterly revenue move from R$4.12b and EPS of R$2.21 in Q3 2024 to R$4.81b and EPS of R$2.51 in Q3 2025, with full year earnings running alongside a 29.1% net profit margin that compares to 27.8% in the prior year. This gives investors a clearer read on how profitability is feeding through to the bottom line. See our full analysis for XP. With the headline numbers on the table, the next step is to see how this earnings print lines up with the main narratives around XP, including what the community and the broader market have been expecting. See what the community is saying about XP NasdaqGS:XP Earnings & Revenue History as at Feb 2026 AdvertisementMargins Hold Near 29% As Revenue Scales  On a trailing basis, XP earned R$5.2b of net income on R$17.8b of revenue, which works out to a 29.1% net margin compared with 27.8% in the prior year. Consensus narrative sees product diversification and tech investment as key margin drivers, and the current 29.1% margin plus 14.5% earnings growth over the past year give some support to that.\n     At the same time, analysts expect margins to ease to about 27.0% over the next few years, so the current level sits above what they are baking in. That creates a simple check for you as an investor: whether you think the recent margin profile is a high point or something XP can hold closer to over time.    Earnings Growth Outpaces Forecasts, But Bears Flag Slower Future  Trailing earnings grew 14.5% over the last year, compared with the 11% per year earnings growth that is currently forecast and the 12.9% average yearly growth over the past five years. Bears highlight rising competition and fee compression as threats to XP's long run earnings power, and the gap between the 14.5% trailing growth rate and the 11% forecast growth rate reflects that concern in the numbers.\n     Forecast growth of 11% per year is also below the 15.7% figure given for the US market, which is exactly the kind of relative gap cautious investors point to. On the other hand, the last twelve months of 14.5% earnings growth show the business has recently been growing closer to that consensus market number than the forward estimates assume.    On top of the headline figures, skeptics are asking whether XP's recent 14.5% earnings growth can keep up in the face of fee pressure and new digital competitors, or if the slower 11% forecasts will prove closer to reality. 🐻 XP Bear Case P/E Of 10.4x Versus Higher Targets  XP is trading on a 10.4x P/E with a current share price of US$19.87, compared with an analyst price target of US$23.87 and a DCF fair value of US$25.18, while peer and industry P/Es sit at 20.8x and 22.1x. Bulls argue that strong profitability and advisor productivity could justify a higher multiple over time, and the current discount to both the 23.87 analyst target and the 25.18 DCF fair value is one of their key talking points.\n     The combination of a 29.1% net margin and 14.5% trailing earnings growth gives bulls concrete numbers to point to when they compare 10.4x for XP with more than 20x for peers. At the same time, the forecasts that call for earnings growth of about 11% per year show that any re rating argument rests on how much weight you put on recent performance versus those slower projections.    Bulls see a low 10.4x P/E and margins near 29% as a potential setup for XP if the market starts to price in more of that earnings power. 🐂 XP Bull Case  Next Steps To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for XP on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves. See numbers that suggest a different direction? Put that view to work and shape your own take in just a few minutes: Do it your way A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding XP. See What Else Is Out There XP's slower 11% earnings forecasts compared with its recent 14.5% growth and higher peer P/Es suggest some investors worry about future growth and re rating potential. If that gap between recent results and cautious forecasts has you looking for a clearer margin of safety, check out 53 high quality undervalued stocks that already screen for quality and pricing power today.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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