PagSeguro Digital (PAGS) & Its Competitors Critical Analysis

PagSeguro Digital (NYSE:PAGS) is one of 341 public companies in the “Financial Services” industry, but how does it contrast to its competitors? We will compare PagSeguro Digital to related businesses based on the strength of its earnings, valuation, analyst recommendations, institutional ownership, profitability, dividends and risk.

Analyst Recommendations

This is a summary of recent recommendations for PagSeguro Digital and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagSeguro Digital	1	6	1	0	2.00
PagSeguro Digital Competitors	1987	6945	11711	446	2.50

PagSeguro Digital presently has a consensus target price of $10.07, suggesting a potential upside of 32.54%. As a group, “Financial Services” companies have a potential downside of 6.28%. Given PagSeguro Digital’s higher probable upside, equities analysts clearly believe PagSeguro Digital is more favorable than its competitors.

Dividends

PagSeguro Digital pays an annual dividend of $1.12 per share and has a dividend yield of 14.7%. PagSeguro Digital pays out 78.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Financial Services” companies pay a dividend yield of 4.2% and pay out -92.3% of their earnings in the form of a dividend.

Institutional and Insider Ownership

45.9% of PagSeguro Digital shares are owned by institutional investors. Comparatively, 43.0% of shares of all “Financial Services” companies are owned by institutional investors. 21.9% of shares of all “Financial Services” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares PagSeguro Digital and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PagSeguro Digital	10.46%	16.36%	3.25%
PagSeguro Digital Competitors	-409.12%	-40.47%	-6.29%

Earnings & Valuation

This table compares PagSeguro Digital and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
PagSeguro Digital	$3.65 billion	$379.40 million	5.31
PagSeguro Digital Competitors	$6.32 billion	$1.09 billion	7.34

PagSeguro Digital’s competitors have higher revenue and earnings than PagSeguro Digital. PagSeguro Digital is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Volatility & Risk

PagSeguro Digital has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, PagSeguro Digital’s competitors have a beta of 2.51, suggesting that their average stock price is 151% more volatile than the S&P 500.

Summary

PagSeguro Digital competitors beat PagSeguro Digital on 9 of the 15 factors compared.

PagSeguro Digital Company Profile

PagSeguro Digital Ltd., together with its subsidiaries, provides financial technology solutions and services for consumers, individual entrepreneurs, micro-merchants, and small and medium-sized companies in Brazil and internationally. The company's products and services include PagSeguro Ecosystem, a digital ecosystem that operates as a closed loop where its clients are able to address their primary day to day financial needs, including receiving and spending funds, and managing and growing their businesses; PagBank digital account, which offers payment and banking services through the PagBank mobile app, as well as centralizes various cash-in options, functionalities, services, and cash-out options in a single ecosystem; and PlugPag, a tool for medium-sized and larger merchants that enables them to connect their point of sale (POS) device directly to their enterprise resource planning software or sales automation system through Bluetooth. It also offers cash-in solutions; online and in-person payment tools; and online gaming and cross-border digital services, as well as issues prepaid, credit, and cash cards. In addition, the company provides functionalities, and value-added services and features, such as purchase protection mechanisms, antifraud platform, account and business management tools, POS app, i-Banking App, Super App, and e-commerce support and bill payment services; and PedeFácil, an order management and food delivery app. Further, it is involved in processing of back-office solutions, including sales reconciliation, and gateway solutions and services, as well as the capture of credit cards with acquirers and sub acquirers. The company was founded in 2006 and is headquartered in São Paulo, Brazil.