Head-To-Head Analysis: PagSeguro Digital (NYSE:PAGS) & FirstCash (NASDAQ:FCFS)

PagSeguro Digital (NYSE:PAGS) and FirstCash (NASDAQ:FCFS) 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 earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Volatility and Risk

PagSeguro Digital has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500. Comparatively, FirstCash has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Insider & Institutional Ownership

45.9% of PagSeguro Digital shares are owned by institutional investors. Comparatively, 80.3% of FirstCash shares are owned by institutional investors. 14.8% of FirstCash shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares PagSeguro Digital and FirstCash”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PagSeguro Digital	$3.22 billion	0.98	$392.38 million	$1.29	7.43
FirstCash	$3.49 billion	1.97	$258.82 million	$6.93	22.45

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

Analyst Recommendations

This is a summary of recent ratings and target prices for PagSeguro Digital and FirstCash, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagSeguro Digital	0	4	4	0	2.50
FirstCash	0	1	4	3	3.25

PagSeguro Digital presently has a consensus target price of $11.50, suggesting a potential upside of 19.98%. FirstCash has a consensus target price of $167.00, suggesting a potential upside of 7.35%. Given PagSeguro Digital’s higher probable upside, analysts plainly believe PagSeguro Digital is more favorable than FirstCash.

Profitability

This table compares PagSeguro Digital and FirstCash’s 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%
FirstCash	8.61%	16.63%	7.70%

Dividends

PagSeguro Digital pays an annual dividend of $0.14 per share and has a dividend yield of 1.5%. FirstCash pays an annual dividend of $1.68 per share and has a dividend yield of 1.1%. PagSeguro Digital pays out 10.9% of its earnings in the form of a dividend. FirstCash pays out 24.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. FirstCash has increased its dividend for 8 consecutive years. PagSeguro Digital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

FirstCash 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 FirstCash

FirstCash Holdings, Inc, together with its subsidiaries, operates retail pawn stores in the United States, Mexico, and rest of Latin America. The company operates in three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions segments. Its pawn stores lend money on the collateral of pledged personal property, including jewelry, electronics, tools, appliances, sporting goods, and musical instruments; and retails merchandise acquired through collateral forfeitures on forfeited pawn loans and over-the-counter purchases of merchandise directly from customers. The company also provides retail POS payment solutions, which focuses on LTO products and facilitating other retail financing payment options across the network of traditional and e-commerce merchant partners. It serves cash and credit-constrained consumers. The company was formerly known as FirstCash, Inc and changed its name to FirstCash Holdings, Inc. in December 2021. FirstCash Holdings, Inc was incorporated in 1988 and is headquartered in Fort Worth, Texas.