Inter & Co, Inc.
INTR is a profitable, still-fast-growing digital bank trading at 7.89x earnings and 0.73x sales despite 36.4% FY2025 revenue growth, rising ROE, and management guiding to 30%+ growth with further NIM expansion.
INTR is cheap because the market still sees a risky, emerging-market digital lender. The numbers increasingly describe something better than that. FY2025 revenue was $2.8B, up 36.4%, EPS was $0.56, up 52.6%, and the latest quarter showed 16.3% ROE, 10.1% NIM, and a 42.1% efficiency ratio. Yet the stock trades at just 7.89x earnings and 0.73x sales, well below peer averages of 13.4x P/E and 3.5x P/S. That gap is too wide for a company still growing this fast and already producing real profitability.
The case depends on three things. First, growth must stay high enough to prove this is not just a one-cycle credit story. Management's long-term outlook remains 30%+ revenue growth, and the loan portfolio already grew 29% YoY to BRL 55.4B in Q2 2026. Second, margin quality has to keep improving. Management reiterated +40 bps annual NIM expansion for FY26, and the shift toward better loan mix, payroll products, insurance attach, and fee income supports that. Third, credit has to stop being the discount. The company still guides to ~6% cost of risk, and that is the one number keeping this from a high-conviction call.
The market is also ignoring how much bad news is already in the stock. Shares are 48.6% below the 52-week high and 29.4% below the 200-day average even after record profitability. That is not what a market looks like when expectations are full. It is what a market looks like when investors are still skeptical that better earnings quality will stick. If INTR shows just two or three more quarters of stable losses, continued NIM strength, and fee contribution from new payroll insurance and merchant products, the multiple can move a long way before fundamentals need to be heroic.
Conviction stays at Medium because this is still a credit-underwriting story as much as a platform story. A digital distribution edge is valuable only if loss rates cooperate. But at $5.32, the stock already discounts a lot of that risk while giving little credit for the operating gains that have already shown up in ROE, margin, and free cash flow.
Private payroll losses fall toward management's target, fee cross-sell scales, ROE keeps rising from 16.3%, and the market starts treating INTR as a scalable digital financial platform rather than a subscale bank.
Management delivers on 30%+ growth and +40 bps FY26 NIM guidance with stable credit, allowing partial multiple catch-up from 7.89x P/E toward peers.
Credit costs stay above 6%, private payroll remediation slips, and the market keeps valuing INTR near book rather than earnings growth.
Quant call aligns with analyst consensus (Strong Buy: 3 buy / 1 hold / 0 sell).
The impediment to action advances action. What stands in the way becomes the way.
Forward earnings power is stronger than the trailing multiple suggests. If INTR can sustain even a moderated version of management's 30%+ growth outlook while holding FY26 cost of risk near 6% and delivering the guided +40 bps annual NIM increase, the stock is trading on an undemanding forward earnings base versus the current 7.89x trailing P/E. The moat is stronger than it was two years ago because the company now has proof of ROE, deposit-funded lending, and cross-sell in payroll, cards, insurance, and merchant products, though durability still depends on underwriting discipline. AI is more likely an advantage than a disruption here, because a digital bank can use it to improve collections, fraud, servicing, underwriting, and customer acquisition efficiency faster than branch-heavy incumbents, but regulation and credit data infrastructure in Brazil still matter because a 100 to 200 basis point miss on losses would overwhelm a lot of that efficiency benefit.
- Valuation is compressed at 7.89x P/E versus 13.4x peer average, despite EPS of $0.56, up 52.6% YoY.
- Core growth remains strong with FY2025 revenue of $2.8B, up 36.4% YoY, and Q2 2026 call commentary for 30%+ revenue growth ahead.
- Profitability is improving in the right places, with Q2 2026 ROE of 16.3%, NIM of 10.1%, and an efficiency ratio of 42.1%, a record low.
- The business is growing much faster than the multiple implies: FY2025 revenue +36.4%, FY2025 EPS +52.6%, and management still says "we can still grow at a 30%-ish. I'd say, maybe a few years to come."
- Profitability is no longer theoretical. Q2 2026 net income reached BRL 421M, ROE hit 16.3%, and management said the business became capital neutral, meaning growth is no longer visibly starving capital.
- Credit spread between INTR and peers is too wide for the operating trend. The stock trades at 7.89x P/E and 0.73x P/S versus peers at 13.4x P/E and 3.5x P/S, even after delivering record NIM and improving operating leverage.
- The stock has already de-rated hard, now -48.6% from the 52-week high of $10.36, which lowers expectations into a period of improving earnings power and a likely cleaner setup into the November 12, 2026 earnings report.
- Credit is the real swing factor. FY26 cost-of-risk guidance is still around 6%, up from the 5.0%-5.5% range discussed on the 2024 Q2 call, and management admitted private payroll delinquency stayed higher for longer than planned.
- Reported Q2 NIM of 10.1% included a temporary ~15 bps inflation-hedge tailwind, so some of the headline margin strength will not repeat cleanly quarter to quarter.
- The balance sheet is not pristine by plain-vanilla bank standards, with Debt/Equity 2.92, Debt/EBITDA 15.08, and a 0.55 current ratio, which leaves less room for a credit mistake if unsecured products worsen.
- Execution has been adequate, not elite. Over the last eight quarters, earnings included 4 misses, with the largest at -8.3% in May 2025 and -5.7% in November 2025, so management does not yet deserve a premium credibility multiple.
| Metric | Value | Context |
|---|---|---|
| Share price | $5.32 | Current reference price for valuation and scenario framing |
| Quant price target | $13.06 | Ground-truth target, 145.4% upside, Low confidence |
| FY2025 revenue | $2.8B | 36.4% YoY growth |
| FY2025 EPS | $0.56 | 52.6% YoY growth |
| Operating margin | 12.2% | Down from 12.4% in prior FY |
| Net margin | 9.6% | Profitable, but still below mature high-quality bank levels |
| P/E | 7.89x | Below peer average 13.4x |
| P/S | 0.73x | Below peer average 3.5x |
| Debt / EBITDA | 15.08x | High, supports keeping conviction below High |
| Free cash flow | $0.6B | Positive, with $0.0B buybacks and $0.0B dividends |
| Q2 2026 profitability | ROE 16.3% | NIM 10.1% | Both record levels per management |
| 52-week position | $5.04 to $10.36 | Current price is -48.6% versus high and -29.4% below 200-day average |
The biggest risk is that credit normalization stalls, because management still guides to ~6% cost of risk and private payroll delinquency remains above plan, which would block earnings compounding and keep the stock trapped near bank-like multiples.
The next catalyst is Q3 2026 earnings on November 12, 2026, with focus on whether NIM expansion, private payroll loss improvement, and the 130%-135% coverage ratio targets are holding.
Ownership is meaningful but not crowded, with the top three institutions holding 34.7% and insiders at 4.3%. Short interest is modest at 2.82%, or 9.3M shares, and fell 18.8%, so this is not a classic squeeze setup even though 4.2 days-to-cover can add some fuel if results surprise. Options positioning is mildly fragile because the near-term gamma regime is negative and zero-gamma sits at $4.91, about 6.35% below spot, which can amplify downside if the stock loses that level before earnings.
Driven by NII and lending growth, with the loan book at BRL 55.4B, up 29% YoY in Q2 2026.
Fee income rose with client growth, and private payroll insurance launches in August should add fee revenue while lowering provisions.
The thesis is tied to Brazil consumer and SME digital banking penetration, local credit infrastructure, and Central Bank product rails.
INTR posted record Q2 profitability and reiterated 30%+ growth with NIM expansion ahead.
Execution has improved, but credibility is not perfect. On the 2024 Q2 call, management spoke to 5.0%-5.5% cost of risk, about 20 bps per quarter of NIM expansion, and a long-term 30% efficiency ratio target. Since then, they clearly delivered on profitability direction, with ROE rising from 10.4% in 2024 Q2 to 16.3% in 2026 Q2, and net income increasing from BRL 223M to BRL 421M. NIM also moved higher, reaching 10.1%, which supports the claim of improved loan mix and pricing. But the cost-of-risk path missed the original aspiration, now guided at ~6%, and management admitted private payroll delinquency has remained higher for longer than planned. The earnings beat/miss record is mixed, 4 beats, 4 misses over the last eight quarters, so management looks competent and improving, but not yet deserving of full benefit-of-the-doubt status.
On an annual basis, we said this the last quarter, we expect a 40 basis points increase in the annual NIM from the prior year into this one. And we continue to think that will be the case considering the loan mix that we're having -- we're originating at.
But the guidance that we gave last time was cost of risk at around 6%. We continue to think that's the case.
Net income reached BRL 421 million this quarter, a new record. And ROE, also a record, reached 16.3%.
we can still grow at a 30%-ish. I'd say, maybe a few years to come.
the idea is to keep bringing and pushing this credit risk down to levels that are closer to low teens.
INTR's moat is a low-cost digital distribution model tied to a broad financial ecosystem, not a single product. It is strongest where deposits, payroll relationships, cards, insurance, and merchant tools reinforce each other and support a high 10.1% NIM with a record-low 42.1% efficiency ratio. Durability is improving, but it is still only moderate because underwriting and collections quality, not brand alone, will determine whether those returns persist over the next 3 to 5 years.
Capital allocation has been conservative and internally funded. INTR produced $0.6B of FCF with $0.0B in buybacks, $0.0B in dividends, and $0.0B in capex, which is sensible for a bank still proving underwriting through a high-growth phase. The right use of cash today is balance sheet support and selective lending growth, not shareholder distributions, especially with Debt/EBITDA at 15.08 and cost of risk still elevated.
INTR rates a BUY at Medium conviction. The stock is priced like a mediocre bank even though the business is growing like a scaled digital platform and now earning a record 16.3% ROE. The valuation gap is large enough that the stock does not need perfection, only continued proof that growth, NIM, and credit are moving in the right direction. A move toward $13.06 is plausible if the next few quarters confirm stable cost of risk and sustained earnings power. The call would weaken if cost of risk moves materially above 6% or if NIM expansion stalls once the temporary ~15 bps tailwind rolls off.
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Executive Summary
BUY, Medium conviction. Rated BUY, Medium conviction. The stock is pricing INTR like a low-growth, lower-quality regional bank even as the company delivered FY2025 revenue growth of 36.4%, EPS growth of 52.6%, and a record Q2 2026 ROE of 16.3% with NIM at 10.1%. The setup is attractive because shares are 48.6% below the 52-week high and 29.4% below the 200-day average, while the business is still compounding and management reiterated 30%+ long-term growth.
Investment Thesis
INTR is cheap because the market still sees a risky, emerging-market digital lender. The numbers increasingly describe something better than that. FY2025 revenue was $2.8B, up 36.4%, EPS was $0.56, up 52.6%, and the latest quarter showed 16.3% ROE, 10.1% NIM, and a 42.1% efficiency ratio. Yet the stock trades at just 7.89x earnings and 0.73x sales, well below peer averages of 13.4x P/E and 3.5x P/S. That gap is too wide for a company still growing this fast and already producing real profitability.
The case depends on three things. First, growth must stay high enough to prove this is not just a one-cycle credit story. Management's long-term outlook remains 30%+ revenue growth, and the loan portfolio already grew 29% YoY to BRL 55.4B in Q2 2026. Second, margin quality has to keep improving. Management reiterated +40 bps annual NIM expansion for FY26, and the shift toward better loan mix, payroll products, insurance attach, and fee income supports that. Third, credit has to stop being the discount. The company still guides to ~6% cost of risk, and that is the one number keeping this from a high-conviction call.
The market is also ignoring how much bad news is already in the stock. Shares are 48.6% below the 52-week high and 29.4% below the 200-day average even after record profitability. That is not what a market looks like when expectations are full. It is what a market looks like when investors are still skeptical that better earnings quality will stick. If INTR shows just two or three more quarters of stable losses, continued NIM strength, and fee contribution from new payroll insurance and merchant products, the multiple can move a long way before fundamentals need to be heroic.
Conviction stays at Medium because this is still a credit-underwriting story as much as a platform story. A digital distribution edge is valuable only if loss rates cooperate. But at $5.32, the stock already discounts a lot of that risk while giving little credit for the operating gains that have already shown up in ROE, margin, and free cash flow.
Key Metrics
| Metric | Value | Context | |
|---|---|---|---|
| Share price | $5.32 | Current reference price for valuation and scenario framing | |
| Quant price target | $13.06 | Ground-truth target, 145.4% upside, Low confidence | |
| FY2025 revenue | $2.8B | 36.4% YoY growth | |
| FY2025 EPS | $0.56 | 52.6% YoY growth | |
| Operating margin | 12.2% | Down from 12.4% in prior FY | |
| Net margin | 9.6% | Profitable, but still below mature high-quality bank levels | |
| P/E | 7.89x | Below peer average 13.4x | |
| P/S | 0.73x | Below peer average 3.5x | |
| Debt / EBITDA | 15.08x | High, supports keeping conviction below High | |
| Free cash flow | $0.6B | Positive, with $0.0B buybacks and $0.0B dividends | |
| Q2 2026 profitability | ROE 16.3% | NIM 10.1% | Both record levels per management |
| 52-week position | $5.04 to $10.36 | Current price is -48.6% versus high and -29.4% below 200-day average |
Financial Strength
The financial picture is improving faster than the balance sheet optics. Positive $0.6B FCF, a record 16.3% ROE, and management's statement that the business is now capital neutral all suggest the model is starting to self-fund growth. The weak spots are obvious and should not be glossed over: leverage metrics are high, the current ratio is only 0.55, and margin expansion is still somewhat offset by elevated credit costs. This is financially viable and improving, but not bulletproof, which is why the stock deserves a discount to the best banks, just not the deep discount it trades at now.
Competitive Position
INTR's moat is a low-cost digital distribution model tied to a broad financial ecosystem, not a single product. It is strongest where deposits, payroll relationships, cards, insurance, and merchant tools reinforce each other and support a high 10.1% NIM with a record-low 42.1% efficiency ratio. Durability is improving, but it is still only moderate because underwriting and collections quality, not brand alone, will determine whether those returns persist over the next 3 to 5 years.
Management & Guidance
Management's current guide is straightforward: +40 bps annual NIM increase in FY26, cost of risk around 6%, and 30%+ longer-term revenue growth. The latest call carried a 74/100 calibrated sentiment score, and the operating details were specific, including payroll insurance launches in August, relinkage progress, and a collateral product in testing for business accounts. Credibility is decent because profitability and ROE have clearly improved, but it is not spotless because the company has a mixed earnings beat history and had to accept that private payroll delinquency stayed higher for longer than planned. The right read is credible, but verify quarter by quarter.
Segment Analysis
- Brazil lending and banking (Majority of revenue): Driven by NII and lending growth, with the loan book at BRL 55.4B, up 29% YoY in Q2 2026.
- Fee income, insurance, payments, marketplace (Minority but growing): Fee income rose with client growth, and private payroll insurance launches in August should add fee revenue while lowering provisions.
- Geography, Brazil-focused (Predominantly Brazil): The thesis is tied to Brazil consumer and SME digital banking penetration, local credit infrastructure, and Central Bank product rails.
Capital Allocation
Capital allocation has been conservative and internally funded. INTR produced $0.6B of FCF with $0.0B in buybacks, $0.0B in dividends, and $0.0B in capex, which is sensible for a bank still proving underwriting through a high-growth phase. The right use of cash today is balance sheet support and selective lending growth, not shareholder distributions, especially with Debt/EBITDA at 15.08 and cost of risk still elevated.
Management Execution & Track Record
Execution has improved, but credibility is not perfect. On the 2024 Q2 call, management spoke to 5.0%-5.5% cost of risk, about 20 bps per quarter of NIM expansion, and a long-term 30% efficiency ratio target. Since then, they clearly delivered on profitability direction, with ROE rising from 10.4% in 2024 Q2 to 16.3% in 2026 Q2, and net income increasing from BRL 223M to BRL 421M. NIM also moved higher, reaching 10.1%, which supports the claim of improved loan mix and pricing. But the cost-of-risk path missed the original aspiration, now guided at ~6%, and management admitted private payroll delinquency has remained higher for longer than planned. The earnings beat/miss record is mixed, 4 beats, 4 misses over the last eight quarters, so management looks competent and improving, but not yet deserving of full benefit-of-the-doubt status.
Positioning & Flows
Ownership is meaningful but not crowded, with the top three institutions holding 34.7% and insiders at 4.3%. Short interest is modest at 2.82%, or 9.3M shares, and fell 18.8%, so this is not a classic squeeze setup even though 4.2 days-to-cover can add some fuel if results surprise. Options positioning is mildly fragile because the near-term gamma regime is negative and zero-gamma sits at $4.91, about 6.35% below spot, which can amplify downside if the stock loses that level before earnings.
Bull Case
- The business is growing much faster than the multiple implies: FY2025 revenue +36.4%, FY2025 EPS +52.6%, and management still says "we can still grow at a 30%-ish. I'd say, maybe a few years to come."
- Profitability is no longer theoretical. Q2 2026 net income reached BRL 421M, ROE hit 16.3%, and management said the business became capital neutral, meaning growth is no longer visibly starving capital.
- Credit spread between INTR and peers is too wide for the operating trend. The stock trades at 7.89x P/E and 0.73x P/S versus peers at 13.4x P/E and 3.5x P/S, even after delivering record NIM and improving operating leverage.
- The stock has already de-rated hard, now -48.6% from the 52-week high of $10.36, which lowers expectations into a period of improving earnings power and a likely cleaner setup into the November 12, 2026 earnings report.
Bear Case
- Credit is the real swing factor. FY26 cost-of-risk guidance is still around 6%, up from the 5.0%-5.5% range discussed on the 2024 Q2 call, and management admitted private payroll delinquency stayed higher for longer than planned.
- Reported Q2 NIM of 10.1% included a temporary ~15 bps inflation-hedge tailwind, so some of the headline margin strength will not repeat cleanly quarter to quarter.
- The balance sheet is not pristine by plain-vanilla bank standards, with Debt/Equity 2.92, Debt/EBITDA 15.08, and a 0.55 current ratio, which leaves less room for a credit mistake if unsecured products worsen.
- Execution has been adequate, not elite. Over the last eight quarters, earnings included 4 misses, with the largest at -8.3% in May 2025 and -5.7% in November 2025, so management does not yet deserve a premium credibility multiple.
Valuation & Price Target
Engine price target $13.06 (+145.4% vs current), Low confidence.
- P/E Multiple: $37.88 (2% weight)
- PEG (growth-adjusted): $140.3 (0% weight)
- P/S Multiple: $16.8 (5% weight)
- Quality-adjusted: $6.07 (20% weight)
- DCF: $113.37 (0% weight)
This view aligns with the quant baseline BUY (Low conviction), but with a slightly stronger fundamental case than the engine's low-confidence framing. The stock is at 7.89x earnings versus 13.4x peers, while FY2025 delivered 36.4% revenue growth and 52.6% EPS growth, and the latest call reiterated 30%+ growth plus +40 bps annual NIM expansion. The main reason conviction is only Medium, not High, is that the credit story is still not clean enough, with FY26 cost of risk at ~6% and payroll delinquency still above plan. Sell-side consensus is also bullish, but that is only a cross-check, not a pillar of the call.
Risk Assessment
Risk score 30/100 (Low). The biggest risk is that credit normalization stalls, because management still guides to ~6% cost of risk and private payroll delinquency remains above plan, which would block earnings compounding and keep the stock trapped near bank-like multiples.
The Bottom Line
INTR rates a BUY at Medium conviction. The stock is priced like a mediocre bank even though the business is growing like a scaled digital platform and now earning a record 16.3% ROE. The valuation gap is large enough that the stock does not need perfection, only continued proof that growth, NIM, and credit are moving in the right direction. A move toward $13.06 is plausible if the next few quarters confirm stable cost of risk and sustained earnings power. The call would weaken if cost of risk moves materially above 6% or if NIM expansion stalls once the temporary ~15 bps tailwind rolls off.
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