Shift4 Payments (NYSE:FOUR) versus PagSeguro Digital (NYSE:PAGS) Critical Analysis

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PagSeguro Digital	11.00%	15.39%	3.18%
Shift4 Payments	5.02%	40.19%	6.61%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for PagSeguro Digital and Shift4 Payments, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagSeguro Digital	0	4	5	0	2.56
Shift4 Payments	0	7	14	1	2.73

PagSeguro Digital currently has a consensus target price of $11.71, indicating a potential upside of 7.27%. Shift4 Payments has a consensus target price of $92.25, indicating a potential upside of 39.98%. Given Shift4 Payments’ stronger consensus rating and higher possible upside, analysts clearly believe Shift4 Payments is more favorable than PagSeguro Digital.

Volatility & Risk

PagSeguro Digital has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, Shift4 Payments has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500.

Valuation & Earnings

This table compares PagSeguro Digital and Shift4 Payments”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PagSeguro Digital	$3.22 billion	N/A	$392.38 million	$1.29	8.47
Shift4 Payments	$3.33 billion	1.75	$229.60 million	$2.13	30.94

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

Insider & Institutional Ownership

45.9% of PagSeguro Digital shares are owned by institutional investors. Comparatively, 98.9% of Shift4 Payments shares are owned by institutional investors. 25.2% of Shift4 Payments shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Shift4 Payments beats PagSeguro Digital on 12 of the 14 factors compared between the two stocks.

About PagSeguro Digital

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.

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.