More than 5 years of experience in equity analysis in LatAm. We provide our clients with in-depth research and insights to help them make informed investment decisions. Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business rela ...

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sellside) analysts often affect a stock's price, do they really matter? Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about PagSeguro Digital Ltd. (PAGS) . PagSeguro Digital currently has an average ...

In acquiring, record TPV of 124 billion BRL, three times the industry's growth; in banking, record revenue of 434 million BRL, +41% higher than the same period in 2023 SÃO PAULO, Aug. 21, 2024 /PRNewswire/ -- PagBank (NYSE: PAGS), a complete digital bank in financial services and payments solution, announces its results for the second quarter of 2024 (2Q24). Among the key highlights of the period, the company recorded a record net income (Non-GAAP) of 542 million BRL (+31% y/y). Net income in a GAAP basis, ...

Core Viewpoint - Latin American fintechs are gaining investor interest due to their growth potential and attractive valuations, with PagSeguro being highlighted as a notable example despite its risks compared to higher-quality peers like Nu Holdings [1] Financial Performance - PagSeguro reported Q2 revenue of R$4.6 billion, a 19% year-over-year increase, surpassing estimates of R$4.36 billion [2] - The company added 500,000 active clients since Q1 2024, achieving all-time highs in total deposits (R$34.2 billion), TPV (R$124 billion), and Cash-in (R$76.4 billion) [2] - TPV increased by 34% year-over-year, despite a 5% reduction in active merchants, indicating a 42% increase in TPV per active merchant [2][3][4] Credit Portfolio - The credit portfolio reached R$2.9 billion, with 69% in Payroll Loans, 24% in Credit Cards, and 7% in Working Capital, while the NPL90 decreased to 3.2% [6] - The growth in operational indicators supports higher TPV, Cash-in, and credit portfolio, leading to reduced funding costs and increased net income [6] Earnings and Guidance - Net Income (GAAP) for Q2 was R$504 million, a 31% increase from Q2 2023, with diluted EPS at R$1.56, both representing all-time highs [7] - The 2024 guidance was revised upwards, expecting TPV between R$480 billion and R$505 billion and Net Income between R$2.1 billion and R$2.2 billion [7][8] Valuation - PagSeguro's forward P/E ratio is at 11.2x, significantly lower than its 5-year average of 23.6x, indicating an attractive valuation despite a 60% increase in share price over the last year [11][12] - The company is expected to trade between 11x and 15x earnings, reflecting the competitive environment and associated risks [18] Future Outlook - The medium-term outlook remains positive, with revenue expected to grow by 9% in 2025 and 2026, and EPS projected to increase by 16% and 12% respectively [8] - A DCF model suggests a fair price of $1.81 for PAGS stocks, indicating an 8% undervaluation based on conservative growth assumptions [19][20] Conclusion - PagSeguro presents an interesting investment opportunity with strong operational indicators and an attractive valuation, but it is essential to monitor external risks such as macroeconomic conditions and competition [21]

Financial Data and Key Metrics - Total revenue grew 19% YoY to BRL 4.6 billion, driven by strong TPV and revenue growth across all client segments [6] - Gross profit margin reached nearly 40%, an 86 basis points increase compared to Q2 2023, and 40.3% on a year-to-date basis [6] - Net income reached BRL 542 million, a 31% YoY growth, with EPS at BRL 1.68, a 32% increase YoY [6] - Deposits reached a record BRL 34.2 billion, an 87% YoY increase, reflecting strong client engagement and lower funding costs [7] - TPV grew 34% YoY to BRL 124 billion, significantly outpacing the card industry's 11% growth [8] Business Line Performance - Payments TPV grew 34% YoY to BRL 124 billion, with TPV per merchant up 42% YoY [10] - MSMB segment TPV grew 28% YoY to BRL 83.6 billion, driven by cross-selling and productivity improvements [11] - LMEC segment TPV grew 50% YoY to BRL 40.8 billion, accounting for one-third of total TPV, with strong growth in e-commerce and cross-border transactions [12] - Banking segment cash-in reached BRL 76.4 billion, a 52% YoY growth, with active banking clients growing 5% YoY to 17.3 million [13] - Credit portfolio grew 11% YoY to BRL 2.9 billion, with secured products representing 80% of the portfolio [15] Market Performance - The company added 2 million clients in the last 12 months, reaching 31.6 million clients by the end of June, with 17.7 million active clients [7] - PagBank app received high ratings of 4.9 stars on the App Store and 4.8 stars on Google Play [8] - The company achieved an AAA rating from both Moody's and S&P, enhancing its financial strength and CDS distribution [14] Strategic Direction and Industry Competition - The company is focused on expanding its payments business with a merchant profile that offers better engagement and profitability [10] - The strategy includes attracting merchants with monetization potential in financial services, particularly in the MSMB and LMEC segments [8] - The company is leveraging its banking platform to provide a seamless experience combining payments, value-added services, and banking, driving higher client engagement [13] - The company is exploring alternatives to reduce the cost of funding, supported by its strong deposit franchise [15] Management Commentary on Operating Environment and Future Outlook - Management highlighted the strong operational and financial performance, with all-time highs in key metrics such as revenue, net income, and TPV [6] - The company expects to maintain a gross profit margin above 40% for the year, with TPV guidance increased to BRL 480-505 billion [23] - Management emphasized the importance of balancing growth and profitability, with a focus on sustainable growth and long-term value creation [27] Other Important Information - The company is investing in customer care, product development, and service level agreements to improve client experience and engagement [21] - Tax efficiency initiatives are running above expectations, reducing income tax charges and optimizing the tax structure [20] - The company is increasing its guidance for the year, reflecting strong performance in larger segments and new growth avenues such as cross-border transactions [23] Q&A Session Summary Question: Guidance Adjustment and P&L Impact [25] - The company adjusted its TPV guidance upwards by 10%, but net income guidance increased only 2%, reflecting higher financial expenses due to increased interest rates [26] - Management explained that the company is managing costs and balancing growth with profitability, despite higher-than-expected interest rates [27] Question: SG&A Expenses and Future Efficiency [29] - SG&A expenses increased due to higher marketing and personnel costs, but management expects these to stabilize in the second half of the year [30] - The company is investing in customer experience and product development, which is expected to drive higher client engagement and cross-selling [30] Question: LMEC Segment Growth and Profitability [34] - The LMEC segment grew 50% YoY, but margins are lower compared to the MSMB segment, though still accretive to the bottom line [35] - Management expects the LMEC segment to continue growing faster than the MSMB segment, driven by e-commerce and cross-border transactions [41] Question: Deposits and Credit Portfolio Growth [83] - Deposits grew 87% YoY, but the loan-to-deposit ratio remains low at 8%, with management focusing on growing the credit portfolio, particularly in working capital and overdraft products [83] - The company expects the credit portfolio to become more balanced between retail and wholesale loans in the future [87] Question: CapEx and Future Investments [91] - CapEx is running above guidance at BRL 2.4 billion annualized, with investments focused on technology and product development rather than POS [92] - Management expects CapEx to stabilize in the coming quarters, with a focus on supporting business expansion and future growth [92] Question: Gross Profit Margin and Funding Costs [94] - Gross profit margin as a percentage of TPV declined by 11 basis points, partly due to the growth of the LMEC segment and the mix of products such as PIX [95] - The company is exploring alternatives to reduce funding costs, with no specific target for cost versus CDI, but a focus on diversifying funding sources [98]

Core Insights - PagSeguro Digital Ltd. reported quarterly earnings of $0.32 per share, exceeding the Zacks Consensus Estimate of $0.31 per share, and up from $0.26 per share a year ago, representing an earnings surprise of 3.23% [1] - The company achieved revenues of $874.38 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 7.11%, compared to $772.83 million in the same quarter last year [2] - PagSeguro Digital has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was 10%, with actual earnings of $0.33 per share against an expected $0.30 [1] - The current consensus EPS estimate for the upcoming quarter is $0.31, with projected revenues of $828.27 million, and for the current fiscal year, the EPS estimate is $1.27 on revenues of $3.36 billion [7] Stock Performance - PagSeguro Digital shares have increased approximately 17.1% since the beginning of the year, slightly underperforming the S&P 500's gain of 17.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Financial Transaction Services industry, to which PagSeguro Digital belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

PAGS's full-year Zacks Consensus Estimates are calling for earnings of $1.44 per share and revenue of $3.15 billion. These results would represent year-over-year changes of +32.11% and -1.63%, respectively. We can also see that PAGS currently has a PEG ratio of 0.56. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As the market closed yesterday, the Financial Transaction Services industry was having an average PEG r ...

Heading into today, shares of the company had gained 22.33% over the past month, outpacing the Business Services sector's gain of 0.5% and the S&P 500's gain of 4.43% in that time. The investment community will be paying close attention to the earnings performance of PagSeguro Digital Ltd. in its upcoming release. It is anticipated that the company will report an EPS of $0.35, marking a 34.62% rise compared to the same quarter of the previous year. Our most recent consensus estimate is calling for quarterly ...

Loading... Shares of PagSeguro Digital Ltd PAGS were trading down on Wednesday. The PagSeguro Digital Analyst: Tito Labarta upgraded the rating for PagSeguro Digital from Neutral to Buy, while keeping the price target unchanged at $15. Check out other analyst stock ratings. The pending privatization of Cielo "may create further opportunities" for StoneCo Ltd STNE and PagSeguro Digital to gain share, he added. PAGS Price Action: Shares of PagSeguro Digital had declined by 0.13% to $11.16 at the time of publi ...

Investment Thesis I recommend buying PagSeguro (NYSE:PAGS) shares after the 1Q24 results released on May 23rd. As a growth company, PagSeguro delivered a great annual increase of 31.7% in net income. Another highlight is that the company reported that it reached 31.4 million customers, of which 17.3 million are active customers. Furthermore, the company is growing in low-risk and profitable products, while launching new and promising products, something important when operating in a sector characterized by ...