DLocal (NasdaqGS:DLO): Valuation in Focus as Guidance Rises After Africa Expansion and Strong Q2

DLocal (NasdaqGS:DLO) caught investors’ attention after it raised full-year 2025 guidance, following robust second quarter results and an expansion into Africa through its AZA Finance acquisition. The company’s focus on FX and treasury enhancements is resonating.

See our latest analysis for DLocal.

After raising full-year guidance and sharing news of its expansion into Africa, DLocal’s momentum has clearly caught the market’s attention. In just the past three months, the company’s share price has returned 36%, while its total return over the last year has soared to 68%. This sharp recovery hints at renewed optimism for its long-term prospects. Despite a tough ride over the past three years, recent gains suggest investors are warming to DLocal’s growth narrative as the company deepens its reach and scales new markets.

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With shares sharply rebounding and guidance moving higher, the key question is whether DLocal’s current price accurately reflects its future growth or if there is still an undervalued opportunity for investors to seize.

Most Popular Narrative: 92% Undervalued

DLocal’s most widely followed narrative estimates a fair value that is more than double its current share price. This highlights dramatic potential upside and stands out after the recent rally. The stage is set for a bold growth story.

“DLocal operates as a single operating segment, payment processing, offering a unified platform that supports complex cross-border and local-to-local transactions in emerging markets. The company’s core moat derives from deep integration with local payment methods in emerging markets, especially in Latin America, Africa, and Asia, regulatory expertise and on-the-ground relationships that are hard to replicate for new entrants, and the ability to serve both pay-in and pay-out transactions for global merchants. This creates high switching costs for enterprise customers.”

Read the complete narrative.

Curious about DLocal’s secret sauce behind this high valuation? The narrative focuses on relentless expansion, significant margin improvements, and assumptions that could challenge typical fintech norms. Which growth rates and profitability boosts are driving this valuation? See what financial levers may push DLocal’s fair value far beyond expectations.

Result: Fair Value of $195.39 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rapid product expansion delays or a loss of reputation in key markets could quickly undermine DLocal's bullish narrative and growth assumptions.

Find out about the key risks to this DLocal narrative.

Another View: Market Pricing by Comparison

While the narrative points to massive upside, looking at DLocal’s price-to-earnings ratio (30x) reveals a different picture. It sits above the US industry average (16.1x) and even above the peer average (33.6x). Compared to the fair ratio of 20.7x, this increases valuation risk if the market shifts toward more typical pricing standards. Could enthusiasm for rapid growth be making the shares too expensive, or is there a genuine outlier advantage here?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out DLocal for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own DLocal Narrative

If you see things differently or want to dive deeper into the numbers, you can craft your own perspective in just a few minutes. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding DLocal.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.