Head to Head Survey: PagSeguro Digital (NYSE:PAGS) vs. Mastercard (NYSE:MA)

Mastercard (NYSE:MA) and PagSeguro Digital (NYSE:PAGS) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for Mastercard and PagSeguro Digital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mastercard	1	1	20	6	3.11
PagSeguro Digital	0	4	5	0	2.56

Mastercard presently has a consensus price target of $664.40, suggesting a potential upside of 34.62%. PagSeguro Digital has a consensus price target of $11.86, suggesting a potential upside of 14.62%. Given Mastercard’s stronger consensus rating and higher possible upside, analysts clearly believe Mastercard is more favorable than PagSeguro Digital.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Mastercard	45.65%	203.92%	29.74%
PagSeguro Digital	10.37%	16.20%	3.33%

Dividends

Mastercard pays an annual dividend of $3.48 per share and has a dividend yield of 0.7%. PagSeguro Digital pays an annual dividend of $0.14 per share and has a dividend yield of 1.4%. Mastercard pays out 21.1% of its earnings in the form of a dividend. PagSeguro Digital pays out 10.9% 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. Mastercard has raised its dividend for 13 consecutive years. PagSeguro Digital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

97.3% of Mastercard shares are owned by institutional investors. Comparatively, 45.9% of PagSeguro Digital shares are owned by institutional investors. 0.1% of Mastercard shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Mastercard has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500. Comparatively, PagSeguro Digital has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mastercard	$32.79 billion	13.42	$14.97 billion	$16.52	29.88
PagSeguro Digital	$3.65 billion	0.93	$379.40 million	$1.28	8.08

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

Summary

Mastercard beats PagSeguro Digital on 15 of the 18 factors compared between the two stocks.

About Mastercard

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. The company offers integrated products and value-added services for account holders, merchants, financial institutions, digital partners, businesses, governments, and other organizations, such as programs that enable issuers to provide consumers with credits to defer payments; payment products and solutions that allow its customers to access funds in deposit and other accounts; prepaid programs services; and commercial credit, debit, and prepaid payment products and solutions. It also provides solutions that enable businesses or governments to make payments to businesses, including Virtual Card Number, which is generated dynamically from a physical card and leverages the credit limit of the funding account; a platform to optimize supplier payment enablement campaigns for financial institutions; and treasury intelligence platform that offers corporations with recommendations to enhance working capital performance and accelerate spend on cards. In addition, the company offers Mastercard Send, which partners with digital messaging and payment platforms to enable consumers to send money directly within applications to other consumers; and Mastercard Cross-Border Services enables a range of payment flows through a distribution network with a single point of access to send and receive money globally through various channels, including bank accounts, mobile wallets, cards, and cash payouts. Further, it provides cyber and intelligence solutions; insights and analytics, consulting, marketing, loyalty, processing, and payment gateway solutions for e-commerce merchants; and open banking and digital identity services. The company offers payment solutions and services under the MasterCard, Maestro, and Cirrus name. Mastercard Incorporated was founded in 1966 and is headquartered in Purchase, New York.

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.