Core Viewpoint - The analysis compares PagSeguro Digital Ltd. (PAGS) and DLocal (DLO) to determine which stock is a better undervalued investment option for investors interested in Financial Transaction Services [1]. Valuation Metrics - Both PAGS and DLO currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3]. - PAGS has a forward P/E ratio of 6.43, significantly lower than DLO's forward P/E of 23.86, suggesting PAGS is more undervalued [5]. - The PEG ratio for PAGS is 0.47, while DLO's PEG ratio is 3.26, further indicating PAGS's superior valuation based on expected EPS growth [5]. - PAGS has a P/B ratio of 0.96, compared to DLO's P/B of 9.07, reinforcing the notion that PAGS is undervalued relative to its book value [6]. - Based on these valuation metrics, PAGS holds a Value grade of A, while DLO has a Value grade of C, suggesting PAGS is the superior value option at this time [6].

Core Viewpoint - PagSeguro Digital Ltd. (PAGS) has seen a 12.2% increase in share price over the past four weeks, closing at $7.92, with a potential upside of 34% based on Wall Street analysts' mean price target of $10.61 [1] Price Targets and Analyst Estimates - The mean estimate consists of 11 short-term price targets with a standard deviation of $3.45, indicating variability among analysts; the lowest estimate is $5 (36.9% decline), while the highest is $16 (102% increase) [2] - A low standard deviation suggests a high degree of agreement among analysts regarding the stock's price movement direction, which can serve as a starting point for further research [7] Earnings Estimates and Analyst Optimism - Analysts are optimistic about PAGS's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which has historically correlated with stock price movements [9] - Over the last 30 days, two earnings estimates for PAGS have increased, leading to a 6.4% rise in the Zacks Consensus Estimate [10] Zacks Rank and Investment Potential - PAGS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting a strong potential upside in the near term [11] Conclusion on Price Targets - While the consensus price target may not reliably indicate the extent of PAGS's potential gains, it does provide a useful guide for the direction of price movement [12]

Financial Data and Key Metrics Changes - PagSeguro Digital achieved a record total payment volume (TPV) of BRL 518 billion, representing a 32% year-over-year growth [6] - Net revenues increased by 18% year-over-year, reaching BRL 18.8 billion, while net income reached an all-time high of BRL 2.3 billion, a 28% growth compared to 2023 [7] - Diluted earnings per share (EPS) on a GAAP basis reached BRL 6.62, growing 30% versus the previous year [7] - Return on average equity (ROE) improved to 15.2%, a 198 basis points increase year-over-year [8] Business Line Data and Key Metrics Changes - The banking business segment saw a record revenue of BRL 513 million, growing 58% year-over-year, primarily driven by interest income from the expanding credit portfolio [31] - The merchant acquiring business recorded a TPV of BRL 146 billion in Q4 2024, growing 28% year-over-year, with TPV per merchant increasing by 33% [18] - The credit portfolio reached BRL 3.4 billion, a 36% year-over-year increase, with secured products making up 85% of the loan book [27] Market Data and Key Metrics Changes - The overall client base grew to 33.2 million, adding 2.1 million clients year-over-year, with 17.8 million active clients [16] - Cash-in per active client grew 35% year-over-year, reaching BRL 5,400 per client [23] - Total deposits increased by 31%, reaching BRL 36.1 billion, despite ongoing initiatives to reduce funding costs [24] Company Strategy and Development Direction - The company aims to explore new growth verticals and improve shareholder value through a buyback program, having executed over 50% of a $200 million buyback program launched in August 2024 [11] - PagSeguro is focused on integrating payments and banking services to enhance customer engagement and transactionality [22] - The strategy includes a dynamic repricing approach to mitigate the impact of rising interest rates while maintaining client relationships [72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges, having outperformed guidance despite a higher-than-expected SELIC rate [10] - For 2025, the company expects gross profit growth between 7% and 11% and EPS growth in the range of 11% to 15% [43] - The management highlighted the increasing relevance of the banking segment, which achieved a remarkable year-over-year revenue growth of 34% [47] Other Important Information - The company has maintained a conservative capital structure while achieving consistent results, with a focus on creating shareholder value [48] - The total credit portfolio has been growing steadily, with a significant reduction in non-performing loans (NPL) from 3.2% to 2.3% [28] Q&A Session Summary Question: Inquiry about the credit portfolio and collateralized loans - Management confirmed a healthy credit portfolio growing at 36% year-over-year and plans to continue growing secured loans faster than the market [54] Question: Clarification on transaction activities revenue decrease - Management explained that while transaction activities revenue decreased by 8% year-over-year, financial income increased by 51%, leading to an overall revenue growth of 18% [58] Question: Guidance on EPS growth and net income expectations - Management clarified that the EPS guidance does not factor in buybacks and expects net income to grow at a similar rate [62] Question: Details on TPV growth expectations - Management indicated that they expect to continue growing TPV faster than the industry, with ABECS projecting a 9% to 11% growth in cards for 2025 [68] Question: Breakdown of TPV expansion in the LMEC segment - Management noted that LMEC grew 45% year-over-year, with e-commerce and cross-border transactions being significant contributors [76] Question: Insights on repricing strategy - Management stated that repricing is a dynamic process and they have already begun repricing in 2025, with plans to continue as necessary [74] Question: Capital allocation and excess capital investment - Management emphasized a cautious approach to capital allocation, preferring buybacks over dividends in the current market environment [92] Question: Impact of new regulations on PAGS business - Management reported no material changes since the new regulations were implemented, maintaining a focus on growing the card-not-present transaction segment [125]

Core Insights - PagSeguro Digital Ltd. reported quarterly earnings of $0.34 per share, exceeding the Zacks Consensus Estimate of $0.29 per share, and showing a slight increase from $0.33 per share a year ago, resulting in an earnings surprise of 17.24% [1] - The company achieved revenues of $875.27 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 5.76%, although this represents a decrease from $877.6 million in the same quarter last year [2] - PagSeguro Digital has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The immediate price movement of PagSeguro Digital's stock will largely depend on management's commentary during the earnings call and the future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $808.53 million, while for the current fiscal year, the estimate is $1.14 on revenues of $3.52 billion [7] Industry Context - The Financial Transaction Services industry, to which PagSeguro Digital belongs, is currently ranked in the top 33% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The correlation between near-term stock movements and earnings estimate revisions suggests that tracking these revisions can provide insights into stock performance [5]

Core Insights - PagBank reported a net revenue of R$5.1 billion for Q4 2024, an 18% increase from Q4 2023, with a full-year net revenue of R$631 million, reflecting a 21% year-over-year growth [1][3] - The return on average equity (ROAE) reached 15.2% in 2024, indicating strong financial performance [1][3] - The total payment volume (TPV) for Q4 2024 was R$146 billion, a 28% increase compared to Q4 2023, with a total TPV of R$518 billion for the year, representing a 32% year-over-year growth [3][4] Customer and Market Expansion - PagBank's customer base grew to 33.2 million, an increase of 2.1 million customers over the year [3] - The credit portfolio expanded to R$48 billion, reflecting a 46% year-over-year growth, while total deposits reached R$36.1 billion, a 31% increase year-over-year [4] Investment and Operational Efficiency - The company invested R$2.3 billion in technology in 2024 to enhance service quality and expand its business [3] - Operational leverage improved by 74 basis points for the quarter, and a share buyback program totaling R$784 million was executed in 2024 [6] Future Outlook - PagBank maintains a positive outlook for 2025, focusing on customer base expansion, product diversification, and market share growth [7][8] - The company is committed to enhancing its financial services and maintaining a strong ESG framework [9]

Group 1 - PagSeguro Digital Ltd. closed at $8.16, with a +0.49% change, outperforming the S&P 500's daily loss of 0.43% [1] - The company's shares have appreciated by 22.1% over the past month, exceeding the Business Services sector's gain of 18.96% and the S&P 500's gain of 2.6% [1] Group 2 - The upcoming earnings report for PagSeguro Digital Ltd. is projected to show an EPS of $0.29, reflecting a 12.12% decrease year-over-year, with revenue estimated at $827.6 million, indicating a 5.7% decrease [2] - Recent modifications to analyst estimates are crucial as they reflect changing business trends, with positive revisions indicating analysts' confidence in the company's performance [3] Group 3 - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a strong track record, with 1 stocks averaging a +25% annual return since 1988; PagSeguro Digital Ltd. currently holds a Zacks Rank of 3 (Hold) [5] - The company is trading with a Forward P/E ratio of 7.14, which is below the industry average of 16.28, and has a PEG ratio of 0.53 compared to the industry average of 1.43 [6] Group 4 - The Financial Transaction Services industry, part of the Business Services sector, has a Zacks Industry Rank of 90, placing it in the top 36% of over 250 industries, indicating strong performance potential [7]

PagSeguro Digital (PAGS) Q4 2024 Earnings Call February 20, 2025 05:00 PM ET Company Participants Gustavo Sechin - Head of IR, Market Intelligence & ESGRicardo Dutra - Principal Executive OfficerAlexandre Magnani - CEOArtur Schunck - Chief Financial & Investor Relations Officer, Chief Accounting Officer and DirectorArnon Shirazi - VP - Equity ResearchBeatriz Abreu - Equity Research Vice PresidentRicardo Buchpiguel - Equity Research DirectorCamila Villaça Azevedo - Equity Research Associate Conference Call P ...

Company Performance - PagSeguro Digital Ltd. ended the recent trading session at $7.85, showing a +0.13% change from the previous day's closing price, which is below the S&P 500's daily gain of 0.39% [1] - Over the past month, shares of PagSeguro Digital Ltd. have increased by 19.33%, outperforming the Business Services sector's gain of 6.41% and the S&P 500's gain of 1.7% [1] Earnings Forecast - The upcoming earnings release for PagSeguro Digital Ltd. is anticipated to show an EPS of $0.29, representing a 12.12% decline compared to the same quarter last year [2] - Revenue is projected to be $827.6 million, reflecting a 5.7% decrease from the equivalent quarter last year [2] Analyst Estimates - Recent changes to analyst estimates for PagSeguro Digital Ltd. indicate the dynamic nature of near-term business trends, with positive revisions suggesting analyst optimism regarding the company's business and profitability [3] Valuation Metrics - PagSeguro Digital Ltd. is currently trading at a Forward P/E ratio of 6.89, which is below the industry average Forward P/E of 15.1, suggesting it is trading at a discount [6] - The company has a PEG ratio of 0.51, compared to the industry average PEG ratio of 1.35, indicating a favorable valuation relative to expected earnings growth [7] Industry Ranking - The Financial Transaction Services industry, part of the Business Services sector, holds a Zacks Industry Rank of 139, placing it in the bottom 45% of over 250 industries [7] - The Zacks Industry Rank evaluates the performance of distinct industry groups, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [8]

Company Performance - PagSeguro Digital Ltd. closed at $6.36, with a daily increase of +1.44%, outperforming the S&P 500, which fell by 1.54% [1] - Over the past month, the company's shares have decreased by 9.78%, underperforming the Business Services sector's loss of 3.87% and the S&P 500's loss of 2.2% [1] Upcoming Earnings - The upcoming earnings disclosure is anticipated, with projected earnings per share (EPS) of $0.30, indicating a 9.09% decrease from the same quarter last year [2] - Revenue is estimated to be $830.77 million, reflecting a 5.34% decline from the equivalent quarter last year [2] Analyst Forecasts - Recent revisions to analyst forecasts for PagSeguro Digital Ltd. are important, as they indicate changing business trends [3] - Positive estimate revisions suggest analyst optimism regarding the company's business and profitability [3] Zacks Rank and Valuation - The Zacks Rank system currently rates PagSeguro Digital Ltd. at 4 (Sell), with the consensus EPS estimate having decreased by 5.41% over the past month [5] - The company has a Forward P/E ratio of 5.34, which is a discount compared to the industry average of 13.97 [6] - PagSeguro Digital Ltd. has a PEG ratio of 0.39, significantly lower than the Financial Transaction Services industry's average PEG ratio of 1.2 [7] Industry Context - The Financial Transaction Services industry is part of the Business Services sector, holding a Zacks Industry Rank of 75, placing it in the top 30% of over 250 industries [8] - Strong individual industry groups, as measured by the Zacks Industry Rank, tend to outperform weaker groups by a factor of 2 to 1 [8]

PagSeguro (NYSE: PAGS ) is a relevant player in the payment services market in Brazil, although the most recent data showed the company with around 10.8% market share in the country. Additionally, PagSeguro merged with PagBank, forming I am a researcher and operations manager at DM Martins Research. Previously, I contributed to TheStreet and currently write for platforms such as TipRanks and GuruFocus. Here at Seeking Alpha, my goal is to provide insightful analysis primarily on foreign equities, with a foc ...