PagSeguro Digital (NYSE:PAGS) versus Western Union (NYSE:WU) Financial Comparison

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Western Union	12.33%	62.01%	7.09%
PagSeguro Digital	10.37%	16.20%	3.33%

Dividends

Western Union pays an annual dividend of $0.94 per share and has a dividend yield of 10.7%. PagSeguro Digital pays an annual dividend of $0.14 per share and has a dividend yield of 1.3%. Western Union pays out 61.8% 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.

Insider and Institutional Ownership

91.8% of Western Union shares are owned by institutional investors. Comparatively, 45.9% of PagSeguro Digital shares are owned by institutional investors. 1.6% of Western Union shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Western Union has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, PagSeguro Digital has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Western Union and PagSeguro Digital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Union	5	10	0	0	1.67
PagSeguro Digital	0	4	5	0	2.56

Western Union currently has a consensus price target of $8.82, indicating a potential upside of 0.49%. PagSeguro Digital has a consensus price target of $11.86, indicating a potential upside of 10.66%. Given PagSeguro Digital’s stronger consensus rating and higher probable upside, analysts plainly believe PagSeguro Digital is more favorable than Western Union.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Union	$4.05 billion	0.68	$499.60 million	$1.52	5.77
PagSeguro Digital	$3.65 billion	0.97	$379.40 million	$1.28	8.37

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

Summary

Western Union beats PagSeguro Digital on 9 of the 16 factors compared between the two stocks.

About Western Union

The Western Union Company provides money movement and payment services worldwide. The company operates through Consumer Money Transfer and Consumer Services segments. The Consumer Money Transfer segment facilitates money transfers for international cross-border and intra-country transfers, primarily through a network of retail agent locations, as well as through websites and mobile devices. The Consumer Services segments offers bill payment services, which facilitate payments for consumers, businesses, and other organizations, as well as money order services, retail foreign exchange services, prepaid cards, lending partnerships, and digital wallets. The company was founded in 1851 and is headquartered in Denver, Colorado.

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.