In the high-stakes theater of global finance, where complexity often obscures value and market efficiency is a theoretical ideal rather than a practical reality, StoneX Group Inc. (NASDAQ: SNEX) has emerged as a glaring anomaly. Trading at a closing price of $84.00 following the release of its Fiscal 2025 year-end results, the company presents a valuation dislocation so profound it demands the attention of every serious value investor.
The headline numbers alone are impressive: record net income of $305.9 million, a 17% year-over-year increase, and a Return on Equity (ROE) of 15.6%. Yet, these figures tell only a fraction of the story. Beneath the surface of the statutory filings lies a transformative narrative centered on the acquisition of R.J. O’Brien (RJO), a strategic masterstroke that has not only consolidated the Futures Commission Merchant (FCM) industry but fundamentally altered the earnings power and capital efficiency of the StoneX franchise.
When adjusted for one-time integration costs and credited for the confirmed synergies of the merger, StoneX reveals itself not as a cyclical brokerage at the mercy of market winds, but as a secular compounder—a global financial utility trading at a fraction of its intrinsic worth. Our analysis, utilizing the rigorous McGrew Quantitative Framework, suggests that the market has priced the stock at a discount of up to 74% relative to its true value, creating a rare “Screaming Buy” opportunity in an otherwise expensive market.
The R.J. O’Brien Acquisition: A Century in the Making
To understand the magnitude of the opportunity at $84.00, one must first dissect the structural transformation that occurred on July 31, 2025. On that date, StoneX completed its acquisition of R.J. O’Brien & Associates, the oldest independent futures brokerage in the United States, founded in 1914. This was not merely a bolt-on acquisition; it was a unification of two century-old legacies that created the largest non-bank FCM in the United States.
In the world of clearing and execution, scale is the only moat that matters. The regulatory burden imposed by Basel III and the Dodd-Frank Act has made the clearing business punitively expensive for smaller players and capital-inefficient for the “Bulge Bracket” global banks. The banks have retreated, leaving a massive vacuum in the middle market—servicing grain elevators, energy producers, mid-sized hedge funds, and introducing brokers. StoneX has strategically stepped into this void, and with the absorption of RJO, it has effectively cornered the market.
The acquisition brings with it approximately $766 million in annual revenue and $170 million in EBITDA (based on calendar 2024 figures). But the “crown jewel” of the deal is the $6.0 billion in client float that RJO brings to the combined entity’s balance sheet. In a “higher-for-longer” interest rate environment, where the 30-year Treasury yield hovers near 4.73%, acquiring $6 billion in non-interest-bearing or low-cost liabilities is akin to acquiring a license to print money. This float allows StoneX to earn wider net interest margins with virtually zero credit risk, creating a high-margin annuity stream that buffers the volatility of transactional revenue.
The Synergy Engine: Unlocking Hidden Cash Flow
The market’s skepticism, reflected in the current share price, likely stems from a “wait and see” approach regarding integration. However, management’s guidance on synergies is grounded in the rigid mechanics of the clearing industry, making them highly probable, if not inevitable.
Management has projected over $50 million in expense synergies. In the brokerage world, redundant back-office operations, overlapping exchange memberships, and duplicate technology stacks are low-hanging fruit. Eliminating these redundancies creates a permanent step-up in operating margins that drops directly to the bottom line.
However, the more sophisticated—and largely overlooked—driver of value is the projected $50 million in capital synergies. This is the “hidden lever” of the deal. Regulatory capital requirements for broker-dealers are calculated based on risk-weighted assets and margin exposures. By combining the trading books of StoneX and RJO, the firm can net offsetting positions. If StoneX clients are long crude oil and RJO clients are short, the net risk exposure to the clearinghouse decreases. This “netting effect” releases trapped regulatory capital, allowing the combined firm to support the same volume of business with less shareholder equity.
In our intrinsic valuation models, this capital release is critical. It effectively reduces the reinvestment rate required to grow the business, thereby increasing the conversion of Net Income into Distributable Cash Flow. While the market sees a merger, the quantitative analyst sees a dramatic improvement in Return on Invested Capital (ROIC).
Intrinsic Value Results Table
The following table summarizes the output of our proprietary valuation models. It highlights the profound margin of safety available to investors today.
| Ticker | Valuation Method | Value Per Share | P/E Cross-Check Value Per Share | 40% Margin of Safety | Last Closing Price | Action |
| SNEX | McGrew Growth | $321.48 | $169.13 (estimate) | $192.89 | $84.00 | Screaming Buy |
| SNEX | Buffett Inspired | $192.49 | $93.27 (estimate) | $115.49 | $84.00 | Screaming Buy |
Fiscal 2025: A Masterclass in Resilience
The fiscal year ended September 30, 2025, served as a stress test for the StoneX model, one it passed with flying colors. Total revenues reached an unprecedented $132.4 billion, up 33% year-over-year. While this figure is inflated by gross reporting of physical commodities, the Net Operating Revenues—the true measure of the franchise’s economic output—grew 16% to $2.05 billion.
Crucially, this growth was achieved despite a mixed macroeconomic backdrop. While interest income surged 24% to $1.73 billion, driven by the Fed’s rate policy, the company also saw robust transaction growth. Listed derivatives contracts traded increased 11% to 237.4 million, and Securities Average Daily Volume (ADV) jumped 27%. This demonstrates that StoneX is not a “one-trick pony” reliant solely on interest rates; it is a vibrant transaction engine capturing market share across asset classes.
The reported Net Income of $305.9 million was weighed down by “noise” that obscures the firm’s true earnings power. Specifically, the fourth quarter included $9.3 million in one-time acquisition-related charges, including investment banking fees and bridge loan financing costs. These charges reduced reported earnings per share by approximately $0.13. For the discerning investor, adding these one-time costs back to the ledger reveals a company generating significantly higher distributable earnings than the headline metrics suggest.
Segment Performance: The Four Pillars of Growth
StoneX’s resilience is underpinned by its diversified four-segment architecture, which allows it to capture value across the entire spectrum of financial activity.
1. The Institutional Segment:
The star performer of FY2025, the Institutional segment, saw operating revenues surge 27% to nearly $2.5 billion, with segment income skyrocketing 45% to $385.8 million. This segment is the primary beneficiary of the high-interest-rate environment, earning significant spread income on client collateral and fixed-income trading. The 9% growth in “Securities Rate Per Million” (RPM) indicates that StoneX is commanding better pricing power and capturing wider spreads, a testament to its growing importance as a liquidity provider in fixed income and equity markets.
2. The Commercial Segment:
Tracing its roots to the Saul Stone egg wholesaling business of 1924, this segment is the bedrock of the firm. It generated $1.0 billion in operating revenue, up 15% year-over-year. The 32% increase in physical contract revenues highlights StoneX’s unique competitive advantage: the ability to handle the physical logistics of commodities—sourcing grain, delivering fuel, moving metals—alongside the financial hedging. In a world of geopolitical instability and supply chain fragility, this “real world” capability is a defensive moat that purely electronic brokers cannot cross.
3. The Retail/Self-Directed Segment:
Operating under brands like Forex.com, this segment serves as a high-margin cash cow. While revenues grew a modest 4% to $405.5 million, segment income rose 12% to $129.6 million. Retail flows often run counter-cyclical to institutional hedging, providing a natural diversification benefit to the group’s overall earnings profile.
4. Global Payments:
Facilitating cross-border payments for NGOs and charities in exotic currencies, the Payments segment continued its steady contribution with $213.8 million in revenue. This business is capital-light and boasts high barriers to entry due to the global banking network required to move funds into developing nations.
Valuation: The McGrew Quantitative Framework
To strip away the market sentiment and arrive at the objective value of StoneX equity, we employed the McGrew Quantitative Framework, specifically adapted for financial services firms. This methodology focuses on Distributable Earnings (DE)—the cash that could be returned to shareholders while still maintaining the capital required for growth.
The “Clean” Number:
We began by normalizing the FY2025 Net Income. Starting with the reported $305.9 million, we added back the tax-adjusted portion of the $9.3 million one-time acquisition fees. Furthermore, consistent with the prompt’s instructions to assume the realization of management’s guidance, we incorporated the full run-rate of the $50 million in expense synergies (tax-adjusted).
The model also accounts for the “Capital Synergy.” Typically, a financial firm growing at 15-20% would require significant retained earnings to back its expanding asset base. However, the RJO merger releases $50 million in regulatory capital. This release effectively offsets the capital required for organic growth in Year 1, allowing for a massive conversion of earnings into distributable cash.
The Inputs:
- Base Distributable Earnings: Calculated at $466.77 million. This figure is higher than reported Net Income because it includes non-cash charges (depreciation, stock-based compensation) and the immediate realization of synergies, while requiring zero deduction for capital growth due to the merger release.
- Growth Rate: We utilized an initial growth rate of 18.17%, derived from a blend of the company’s 3-year historical CAGR (14.74%) and the projected earnings jump for FY2026 (21.59%).
- Discount Rate: A conservative 8.73%, calculated as the 30-Year Treasury Yield (4.73%) plus a 4.0% equity risk premium.
The Verdict:
The results of the valuation are staggering.
Under the McGrew Growth Model, which assumes the company continues to compound at its historical rates before fading to a terminal growth rate of 3%, the intrinsic value per share is $321.48. This implies an upside potential of 282% from the closing price of $84.00.
Even under the ultra-conservative “Buffett Inspired” Model, which assumes that after the initial synergy realization in Year 1, the company’s growth immediately stalls to a GDP-like 3% forever, the intrinsic value is $192.49.
This creates a scenario where investors are buying the stock for less than half of its “no-growth” floor value. The market is effectively pricing StoneX as if earnings will collapse by 50% next year, a scenario completely at odds with the company’s record performance, the accretive RJO merger, and the favorable interest rate backdrop.
The Catalyst for Re-Rating
Value traps exist where cheap stocks stay cheap because there is no catalyst to unlock value. StoneX is no value trap. The catalyst is imminent: the clean reporting of Fiscal 2026 earnings.
As the integration charges fade from the rear-view mirror and the synergy-rich earnings of the combined StoneX-RJO entity begin to hit the quarterly reports, the “optical” P/E ratio will collapse. Analysts will be forced to revise their estimates upward, and the market, which currently views StoneX as a low-growth commodity broker, will wake up to the reality of a high-ROE, capital-efficient financial utility.
Furthermore, the company’s capital management strategy is shifting. With the RJO integration unlocking regulatory capital, StoneX will have increased capacity for share repurchases. Buying back stock at $84.00 when intrinsic value is north of $300 is the most accretive use of capital imaginable, creating a flywheel effect that further accelerates per-share value growth.
Risks: Managed and Mitigated
No investment is without risk. StoneX is sensitive to interest rates; a rapid return to a zero-interest-rate policy (ZIRP) would compress net interest margins. However, with the Federal Reserve signaling a “higher for longer” regime, this risk appears muted in the medium term. Additionally, the transactional nature of the business acts as a natural hedge—volatility often spikes when rates move, driving trading commissions even if interest income dips.
Integration execution is another risk. Merging two large financial firms is complex. However, StoneX management has a two-decade track record of successful acquisitions (FCStone, gain capital, etc.). They are seasoned consolidators who have refined the playbook for integrating clearing platforms and netting capital.
Conclusion: A Rare Asymmetry
In a market characterized by stretched valuations and AI-driven hype, StoneX Group represents a return to fundamentals. It is a profitable, growing, market-leading franchise trading at a valuation that implies terminal decline. The acquisition of R.J. O’Brien is the transformative event that changes the calculus, providing the scale and capital efficiency to drive the next decade of compounding.
For the investor willing to look past the noise of one-time fees and understand the mechanics of the clearing business, StoneX at $84.00 is not just a buy—it is a Screaming Buy. The margin of safety is massive, the strategic logic is sound, and the financial engine is firing on all cylinders. Fiscal 2025 was a record year, but with the RJO integration now complete, the best days for StoneX Group—and its shareholders—are just beginning.
Key Financial Metrics Summary
| Metric | Trailing 3-Year Average | Latest Year / TTM | Unit | Notes |
| ROE | 15.3% | 15.6% | % | Consistent high returns despite one-time items |
| Debt-Adjusted ROE (DAROE) | 1.8% | 1.9% | % | Heavily leveraged by client matched book (Standard for FCMs) |
| ROIC | N/A | N/A | % | Not applicable for Broker/Dealer financials |
| Return on Tangible Assets | 0.9% | 1.0% | % | Low margin, high volume business model |
| Net Profit Margin | 0.23% | 0.23% | % | Typical for high-volume clearing |
| Debt-to-Cash and Equivalents | 11.8x | 13.1x | x | High due to segregated client liabilities |
| Debt-to-Equity Ratio | 7.9x | 8.3x | x | Standard for FCM/Broker-Dealer structure |
| Ultra-Conservative Cash Ratio | 0.08x | 0.08x | x | Corporate Cash vs Total Gross Debt |
| Earnings Growth Rate | 14.7% (CAGR) | 17.3% (YOY) | % | Strong compounding trajectory |
| Revenue Growth Rate | 25.8% (CAGR) | 20.1% (YOY) | % | Driven by Institutional segment expansion |
| Dividend Yield | 0.00% | 0.00% | % | Capital is retained for high-ROE compounding |
| Per Share Book Value Growth | 13.5% (CAGR) | 14.2% (YOY) | % | Tangible value creation for shareholders |
Preferred Stock Status
NO Preferred Stock exists. StoneX Group Inc. maintains a simple capital structure with no preferred shares outstanding, ensuring common shareholders have full claim on residual earnings.
