PagSeguro Digital (NYSE:PAGS) & DLocal (NASDAQ:DLO) Critical Survey

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

Valuation & Earnings

This table compares PagSeguro Digital and DLocal”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PagSeguro Digital	$3.65 billion	0.71	$379.40 million	$1.36	6.86
DLocal	$1.21 billion	2.98	$196.80 million	$0.63	19.43

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

Profitability

This table compares PagSeguro Digital and DLocal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PagSeguro Digital	10.40%	16.44%	3.29%
DLocal	15.85%	41.22%	14.27%

Institutional and Insider Ownership

45.9% of PagSeguro Digital shares are owned by institutional investors. Comparatively, 90.1% of DLocal shares are owned by institutional investors. 45.4% of DLocal shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

PagSeguro Digital pays an annual dividend of $1.04 per share and has a dividend yield of 11.1%. DLocal pays an annual dividend of $0.77 per share and has a dividend yield of 6.3%. PagSeguro Digital pays out 76.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DLocal pays out 122.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PagSeguro Digital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagSeguro Digital	1	4	3	0	2.25
DLocal	0	2	5	1	2.88

PagSeguro Digital presently has a consensus price target of $12.00, indicating a potential upside of 28.55%. DLocal has a consensus price target of $16.63, indicating a potential upside of 35.83%. Given DLocal’s stronger consensus rating and higher probable upside, analysts clearly believe DLocal is more favorable than PagSeguro Digital.

Risk and Volatility

PagSeguro Digital has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500. Comparatively, DLocal has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.

Summary

DLocal beats PagSeguro Digital on 11 of the 17 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 DLocal

DLocal Limited operates a payment processing platform worldwide. The company offers pay-in solution which the business and get paid for their products and services through various payment methods, including international and local cards, online bank transfers and direct debit, cash, and alternative payment methods. It also provides pay-out solution used for merchants to scale pay-out operations. In addition, the company offers dLocal for Platforms, an end-to-end payment solution that offers a range of services to help platforms manage payments. It serves its products to commerce, streaming, ride-hailing, financial services, advertising, SaaS, travel, e-learning, on-demand delivery, and gaming and crypto industries. DLocal Limited was founded in 2016 and is headquartered in Montevideo, Uruguay.