Reviewing PayPal (NASDAQ:PYPL) & Shift4 Payments (NYSE:FOUR)

PayPal (NASDAQ:PYPL) and Shift4 Payments (NYSE:FOUR) are both business services companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Institutional & Insider Ownership

68.3% of PayPal shares are held by institutional investors. Comparatively, 98.9% of Shift4 Payments shares are held by institutional investors. 0.1% of PayPal shares are held by company insiders. Comparatively, 25.2% of Shift4 Payments shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares PayPal and Shift4 Payments”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PayPal	$32.86 billion	1.66	$4.15 billion	$4.99	11.65
Shift4 Payments	$3.33 billion	1.67	$229.60 million	$2.13	29.42

PayPal has higher revenue and earnings than Shift4 Payments. PayPal is trading at a lower price-to-earnings ratio than Shift4 Payments, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

PayPal has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500. Comparatively, Shift4 Payments has a beta of 1.66, suggesting that its stock price is 66% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for PayPal and Shift4 Payments, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PayPal	4	22	14	0	2.25
Shift4 Payments	0	6	15	1	2.77

PayPal currently has a consensus price target of $78.29, indicating a potential upside of 34.65%. Shift4 Payments has a consensus price target of $96.55, indicating a potential upside of 54.09%. Given Shift4 Payments’ stronger consensus rating and higher probable upside, analysts plainly believe Shift4 Payments is more favorable than PayPal.

Profitability

This table compares PayPal and Shift4 Payments’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PayPal	14.96%	25.64%	6.45%
Shift4 Payments	5.02%	40.19%	6.61%

Summary

Shift4 Payments beats PayPal on 11 of the 15 factors compared between the two stocks.

About PayPal

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. The company provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, California.

About Shift4 Payments

Shift4 Payments, Inc. (NYSE FOUR) provides integrated payment processing and technology solutions in the United States. Its payments platform provides omni-channel card acceptance and processing solutions, including end-to-end payment processing for various payment types; merchant acquiring; proprietary omni-channel gateway; complementary software integrations; integrated and mobile point-of-sale (POS) solutions; security and risk management solutions; and reporting and analytical tools, as well as tokenization, risk management/underwriting, payment device and chargeback management, fraud prevention, and gift card solutions. The company also offers suite of technology solutions, such as Lighthouse, a cloud-based business intelligence tool that includes customer engagement, social media management, online reputation management, scheduling, and product pricing, as well as reporting and analytics; integrated POS for merchants business; and Skytab, a mobile payment solution. In addition, it provides marketplace technology that enable seamless integrations into third-party applications, which includes online delivery services, payroll, timekeeping, and other human resource services. Further, the company offers merchant management, training and education, marketing management, and incentives tracking solutions. Additionally, it provides merchant underwriting, onboarding and activation, training, risk management, and support services; and software integrations and compliance management, and partner support and services. The company was founded in 1998 and is headquartered in Allentown, Pennsylvania.