NEW YORK – In the intricate landscape of global finance, discovering a company with a stable foundation and substantial growth potential is a rare opportunity. StoneX Group Inc. (NASDAQ: SNEX), a global financial services network, is one such company. While its recent quarterly earnings report showcased a resilient and adaptable business model, the real story lies in a recent, transformational acquisition that analysts believe has set the stage for a period of unprecedented growth. The company’s recently completed acquisition of R.J. O’Brien (RJO) on July 31, 2025, is a pivotal strategic move that fundamentally alters StoneX’s competitive landscape. This merger is a massive positive, creating what is now the largest non-bank Futures Commission Merchant (FCM) in the United States. By combining RJO’s extensive network of over 75,000 clients and its significant client float with StoneX’s deep liquidity and innovative solutions, the company is not just adding to its size, but is creating a powerful new entity with significant revenue, expense, and capital synergies that are projected to drive future growth and enhance profitability.
At its current price of $96.96 per share, StoneX appears to be dramatically undervalued even before the merger, failing to reflect the immense value created by its strategic moves. A comprehensive analysis, utilizing a forward-looking valuation model, suggests the stock could be worth over two-and-a-half times its current price, making it a compelling investment opportunity.
A Quarter of Resilience and Strategic Foresight
StoneX is a diversified global financial services network that connects a wide range of clients—from institutions and commercial businesses to individual retail traders—to the global market ecosystem. Its core business spans clearing, execution, and prime brokerage across a variety of asset classes.
The company’s most recent fiscal third quarter, ending June 30, 2025, offered a clear look at its operational strength. The quarter proved to be a tale of two markets. On one hand, the Commercial segment, which is tied to the physical commodities market, faced headwinds due to diminished market volatility, resulting in a 14% drop in revenue. This is a normal, cyclical challenge in that business line.
However, the company’s diversified model proved its worth. The Institutional and Self-Directed/Retail segments more than compensated for the decline, delivering a powerful performance. The Institutional segment saw net operating revenues surge by 23%, fueled by strong equity markets. The Self-Directed/Retail segment also delivered, with revenues growing by an impressive 19%.
This strategic diversification is the company’s secret weapon, ensuring that a slump in one area doesn’t derail the entire enterprise. It’s the equivalent of an investor holding a balanced portfolio; while one sector might lag, others are there to pick up the slack.
The financial results for the quarter were strong, with a 4% increase in Net Operating Revenues to $488.3 million and a 2% rise in Net Income to $63.4 million. While diluted earnings per share (EPS) saw a slight 2% dip, this was a direct result of $8.9 million in one-time, acquisition-related charges—a small price to pay for what’s coming next.
The Valuation Table: Unlocking StoneX’s True Value
To truly understand why StoneX is undervalued, we must look beyond traditional metrics and use a methodology that accounts for its unique business model and future growth potential. The McGrew Framework Model, a sophisticated valuation method, was used to calculate the company’s intrinsic value. This model is a powerful tool because it doesn’t just look at past performance; it incorporates a forward-looking view of growth, making it particularly relevant for a company like StoneX that is in the midst of a major strategic shift.
The model classifies companies into two types: those with stable, predictable growth and those with higher, more aggressive growth. Because StoneX’s three-year Compound Annual Growth Rate (CAGR) for net income is a robust 21.09%, it qualifies for the “McGrew Growth” method, which is designed for companies expected to grow at a faster clip.
Here is a look at the two valuation models (BEFORE THE MERGER IS FACTORED IN) and how they arrive at their conclusions:
| Valuation Method | Intrinsic Value per Share | Price with 40% Margin of Safety | Last Closing Price (8-5-2025) | Action |
| Buffett-Inspired | $116.33 | $69.80 | $96.96 | Hold |
| McGrew Growth | $268.35 | $161.01 | $96.96 | Screaming Buy |
How the Valuation Table Was Created
The Buffett-Inspired method is a conservative approach. It projects the company’s “Distributable Earnings” (in this case, Net Income) for 10 years using a low, constant growth rate of 3%, which is a conservative baseline for a healthy economy. This approach yields an intrinsic value of $116.33 per share, suggesting the stock is a “Hold.” This is a solid valuation, but it doesn’t fully capture the company’s current momentum.
The McGrew Growth Valuation Method paints a much more compelling picture. This model uses the company’s recent 3-year net income CAGR of 21.09% as the starting point for its projections. It then assumes this growth rate will gradually and linearly decline to a more sustainable 6% over the next decade.
Here is a step-by-step breakdown of how this model arrived at its conclusion:
- Base Earnings: The calculation starts with the company’s Trailing Twelve Months (TTM) Net Income of $295.4 million. This figure is the bedrock for all future projections.
- Growth Projections: The model projects earnings for 10 years, starting with a growth rate of 21.09% in Year 1 and declining to 6% by Year 10. This is a realistic assumption that reflects a company’s ability to grow rapidly at first before settling into a more mature, but still healthy, growth phase.
- Discounting to Present Value: Each year’s projected earnings are then discounted back to their present value using a conservative discount rate of 8%. This is a crucial step that accounts for the time value of money, ensuring we are not overpaying for future earnings.
- Terminal Value: At the end of the 10-year period, the model calculates a terminal value—the value of the company’s earnings in perpetuity. This is calculated using a perpetual growth rate of 2.5%, a reasonable assumption for a stable, mature company. The terminal value is then discounted back to its present value.
- Enterprise & Equity Value: The sum of all the discounted future earnings and the discounted terminal value gives us the company’s Enterprise Value, which for financial services firms, is the same as the Equity Value.
- Intrinsic Value per Share: Finally, the total Equity Value is divided by the number of shares outstanding (49.95 million). This gives us the intrinsic value per share of $268.35.
When you compare this intrinsic value of $268.35 to the current stock price of $96.96, the conclusion is staggering, especially since these are pre-merger numbers. The stock is a “Screaming Buy.” Even if we apply a 40% margin of safety—a buffer to protect against potential miscalculations or unforeseen risks—the buy-in price is $161.01, still well above the current market price.
A Strong Outlook and a Clear Investment Recommendation
The financial analysis, coupled with a deep dive into the company’s strategic moves, paints a very optimistic picture. StoneX has proven its operational resilience and is now making a bold, calculated move to become a dominant force in the global derivatives market. The R.J. O’Brien acquisition is a game-changer that is expected to turbocharge growth through new clients, more capital, and significant operational synergies.
While there are risks—primarily related to the successful integration of a large acquisition and the inherent volatility of financial markets—the company’s diversified revenue streams and strong liquidity position mitigate these concerns. The stock market, it seems, has yet to fully grasp the magnitude of StoneX’s recent strategic moves.
Based on the compelling evidence, particularly the insights from the McGrew Growth Valuation Method, StoneX Group Inc. (SNEX) is assessed to be a “Screaming Buy.” The stock offers a rare blend of stability, driven by its diversified business model, and significant upside potential, fueled by its aggressive and well-executed growth strategy. For investors looking for a high-quality company trading at a substantial discount, StoneX Group could be the perfect addition to their portfolio.
