PagSeguro Digital (NYSE: PAGS) and NEWTEK Business Services (NASDAQ:NEWT) are both business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.
This table compares PagSeguro Digital and NEWTEK Business Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|NEWTEK Business Services||107.74%||8.40%||4.45%|
Insider and Institutional Ownership
22.0% of NEWTEK Business Services shares are held by institutional investors. 6.7% of NEWTEK Business Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
This is a summary of recent ratings and price targets for PagSeguro Digital and NEWTEK Business Services, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|NEWTEK Business Services||0||2||0||0||2.00|
PagSeguro Digital presently has a consensus target price of $35.13, suggesting a potential downside of 8.22%. NEWTEK Business Services has a consensus target price of $19.00, suggesting a potential upside of 7.83%. Given NEWTEK Business Services’ higher probable upside, analysts clearly believe NEWTEK Business Services is more favorable than PagSeguro Digital.
NEWTEK Business Services pays an annual dividend of $1.60 per share and has a dividend yield of 9.1%. PagSeguro Digital does not pay a dividend. NEWTEK Business Services pays out 90.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Valuation and Earnings
This table compares PagSeguro Digital and NEWTEK Business Services’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PagSeguro Digital||$790.32 million||5.20||$149.95 million||$0.14||273.36|
|NEWTEK Business Services||$38.91 million||8.40||$38.97 million||$1.77||9.95|
PagSeguro Digital has higher revenue and earnings than NEWTEK Business Services. NEWTEK Business Services is trading at a lower price-to-earnings ratio than PagSeguro Digital, indicating that it is currently the more affordable of the two stocks.
NEWTEK Business Services beats PagSeguro Digital on 9 of the 15 factors compared between the two stocks.
PagSeguro Digital Company Profile
PagSeguro Digital Ltd is a provider of financial technology solution company. The Company is focused primarily on micro-merchants, small companies and medium-sized companies in Brazil. The Company offers multiple digital payment solutions, In-person payments via POS devices that we sell to clients, free digital accounts, and withdrawing account balances. Its end-to-end digital ecosystem enables its customers accept payments and manage their businesses. It offers safe, affordable, simple, mobile-first solutions for merchants to accept payments and manage their cash through their PagSeguro digital accounts, without the need for a bank account. Its digital account offers more than 30 cash-in methods and six cash-out options including its PagSeguro prepaid card, all using proprietary technology platform and backed by the trusted PagSeguro and UOL brands. Its digital ecosystem also features other digital financial services, business management tools and functionalities for its clients.
NEWTEK Business Services Company Profile
Newtek Business Services Corp. is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States. The firm also seeks to invest in early stage businesses. The firm seeks to makes both debt and equity investments. Under debt investments, it focuses on first lien loans, which have terms of 1 to 25 years; second lien loans, which have terms of 5 to 25 years, and unsecured loans, which are provided to meet short-term funding needs and are repaid within 6 to 12 months. It operates through Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos segments. The company originates small business administration loans for the purpose of acquiring commercial real estate, machinery, equipment, and inventory, as well as to refinance debt and fund franchises, working capital, and business acquisitions; and offers small business loan servicing and consulting services to the Federal Deposit Insurance Corporation and various other financial institutions, as well as provides management services. Its electronic payment processing services include credit and debit card processing, check approval, ancillary processing equipment and software to merchants, eCommerce, electronic solutions to accept non-cash payments, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs. The company also provides Website hosting, dedicated server, and cloud hosting services; Web design and development; Internet marketing; data storage and backup and other related services; and ecommerce services, such as payment processing, online shopping cart tools, Website design and Web related services; Accounts Receivable Financing, and The Secure Gateway. In addition, it offers Newtek Advantage, a mobile, real-time operating platform enabling a business to access data on a smartphone, tablet, laptop, or PC for eCommerce, credit/debit transactions, Website statistics, payroll, insurance, and business loans. Further, the company sells personal, commercial, and health/benefits lines of insurance products; and payroll management processing and employee tax filing services. It has strategic alliances with American International Group, CTAA, Navy Federal Credit Union, Credit Union National Association, Pershing, and others to provide agent services to small business clients. The firm seeks to invest in New York and Louisiana area. The firm seeks to invest $0.3 million to $3 million in businesses. It provides small business terms loans ranging from $0.05 million to $10 million. The firm also provides account receivable financing ranging from $0.05 million to $1.5 million. It also provides $0.05 million to $10 million financing to owner occupied real estate businesses whose average net income over the last 2 years must not exceed $2.5 million. Newtek Business Services Corp., formerly known as Newtek Business Services Inc., was incorporated on August 26, 2013 and is headquartered in Lake Success, New York with additional offices in Garden City, New York; Miami, Florida; Milwaukee, Wisconsin; New Orleans, Louisiana; and New York, New York.
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