Pagseguro Digital (PAGS) AI Stock Analysis

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Pagseguro Digital

(NYSE:PAGS)

75Outperform

Pagseguro Digital receives a solid score of 75, reflecting its strong financial performance, positive earnings call, and attractive valuation. The company's revenue and profit growth, along with effective cost management strategies, are key strengths. However, cash flow issues and macroeconomic challenges like high interest rates present risks that should be addressed. The technical indicators suggest potential for growth, but investors should be cautious of short-term volatility.

Positive Factors

Loan Portfolio

The credit portfolio saw substantial growth, increasing by 34% year-over-year, driven by secured products.

Revenue and Growth

Revenue growth of 18% year over year was supported by strong total payment volume growth and stable net take-rate.

Shareholder Returns

The company announced a dividend and share cancellation, indicating a step in the right direction for shareholder returns.

Negative Factors

Financial Expenses

Financial expenses expanded 42% year-over-year, reflecting higher average Selic.

Market Competition

PagSeguro lost 44 basis points of TPV market share this quarter, indicating intensifying competition in the industry.

Total Payment Volume

There was a deceleration in Total Payment Volume (TPV) growth, coming in at 16% year-over-year, which is lower compared to previous quarters.

Pagseguro Digital (PAGS) vs. S&P 500 (SPY)

Market Cap

$2.98B

Dividend YieldN/A

Average Volume (3M)5.45M

Price to Earnings (P/E)7.4

Beta (1Y)1.12

Revenue Growth2.38%

EPS Growth9.88%

CountryUS

Employees6,751

SectorTechnology

Sector Strength77

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.30

Shares Outstanding209,148,910

10 Day Avg. Volume6,930,171

30 Day Avg. Volume5,446,266

Financial Highlights & Ratios

PEG Ratio1.40

Price to Book (P/B)1.19

Price to Sales (P/S)0.00

P/FCF Ratio-3.61

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$10.60

Price Target Upside17.65% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Pagseguro Digital Business Overview & Revenue Model

Company DescriptionPagSeguro 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 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, and POS app; and operates an online platform that facilitates peer-to-peer lending. 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.

How the Company Makes MoneyPagSeguro Digital generates revenue through a diversified business model centered on its payment processing services. The company earns money by charging transaction fees on payments processed through its POS devices and digital platforms. These fees are typically a percentage of the transaction value plus a fixed fee per transaction. Additionally, PagSeguro offers value-added services such as working capital loans, prepaid cards, and insurance products, which contribute to its revenue streams. The company has established significant partnerships with major banks and financial institutions, enabling it to broaden its service offerings and enhance its market reach. By leveraging its technology and extensive merchant network, PagSeguro continues to capitalize on the increasing adoption of digital payments in Brazil.

Pagseguro Digital Key Performance Indicators (KPIs)

Any

Total Clients

Total Clients
Tracks the total number of clients, providing a measure of market penetration and the company’s ability to attract and retain customers.

Chart InsightsPagSeguro Digital's client base has shown consistent growth, reaching 33.2 million by the end of 2024, driven by strategic initiatives despite macroeconomic challenges. The earnings call highlights a robust performance with record TPV and net income growth, supported by effective repricing strategies and cost management. However, concerns around transaction yields due to PIX and client mix changes pose potential risks. Looking ahead, the company expects continued growth in gross profit and EPS, focusing on revenue enhancement and cost optimization to navigate the challenging economic environment.

Data provided by:

Main Street Data

Pagseguro Digital Financial Statement Overview

Summary

Pagseguro Digital shows a strong income statement performance with consistent revenue and profit growth, underpinned by efficient operations. The balance sheet remains stable with a healthy mix of debt and equity. However, cash flow challenges highlight potential liquidity risks, necessitating careful management of capital expenditures and operational cash flows. Overall, the company is well-positioned in the software industry, with opportunities for improvement in cash management.

Income Statement

Very Positive

Pagseguro Digital demonstrates strong revenue growth with a 16.93% increase in revenue from 2023 to 2024. The company maintains healthy profit margins with a gross profit margin of 47.94% and a net profit margin of 11.54% for 2024. EBIT and EBITDA margins are also robust at 32.50% and 41.13%, respectively, indicating efficient operational performance. The consistent growth trajectory and profitability highlight the company's strong market position.

Balance Sheet

Positive

The balance sheet shows a stable financial position with a debt-to-equity ratio of 0.32, reflecting a manageable level of leverage. The equity ratio stands at 20.11%, suggesting a solid capital structure. Return on equity is at 14.42%, indicating effective use of shareholders' equity to generate profits. While the company has increased liabilities, the equity growth counters potential risks, maintaining overall stability.

Cash Flow

Positive

Pagseguro Digital faces challenges in cash flow management, with a negative free cash flow of -4.55 billion in 2024, compared to 2.01 billion in 2023, indicating significant capital outlays or operational adjustments. The operating cash flow to net income ratio is negative, reflecting cash flow issues despite profitability. However, the company's strategic investments may yield future benefits, offsetting current cash flow concerns.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
18.33B	15.68B	15.16B	10.30B	6.69B
	Gross Profit
8.79B	7.55B	7.69B	4.52B	2.91B
	EBIT
5.96B	5.39B	5.07B	2.12B	1.73B
	EBITDA
7.54B	6.72B	6.19B	2.89B	2.11B
	Net Income Common Stockholders
2.12B	1.65B	1.50B	1.17B	1.29B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.42B	2.90B	2.95B	2.58B	2.62B
	Total Assets
72.90B	55.11B	45.57B	31.15B	22.32B
	Total Debt
4.68B	16.38B	12.12B	4.22B	838.14M
	Net Debt
3.75B	13.48B	10.28B	2.42B	-801.92M
	Total Liabilities
58.23B	41.87B	33.67B	20.62B	13.00B
	Stockholders Equity
14.67B	13.24B	11.91B	10.53B	9.32B
Cash Flow		Free Cash Flow
-4.55B	2.01B	1.39B	-883.46M	106.85M
	Operating Cash Flow
-3.42B	4.00B	3.59B	929.18M	2.17B
	Investing Cash Flow
-1.83B	-2.70B	-2.25B	-1.53B	-1.88B
	Financing Cash Flow
3.27B	-225.99M	-1.31B	764.59M	-45.09M

Pagseguro Digital Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price9.01

Price Trends

50DMA

8.72

Positive

100DMA

7.94

Positive

200DMA

8.49

Positive

Market Momentum

MACD

0.12

Positive

RSI

46.03

Neutral

STOCH

23.93

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAGS, the sentiment is Neutral. The current price of 9.01 is below the 20-day moving average (MA) of 9.60, above the 50-day MA of 8.72, and above the 200-day MA of 8.49, indicating a neutral trend. The MACD of 0.12 indicates Positive momentum. The RSI at 46.03 is Neutral, neither overbought nor oversold. The STOCH value of 23.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PAGS.

Pagseguro Digital Risk Analysis

Pagseguro Digital disclosed 66 risk factors in its most recent earnings report. Pagseguro Digital reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Pagseguro Digital Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLO	82 Outperform	$3.37B	26.11	26.10%	―	33.84%	0.29%
PAGS	75 Outperform	$2.98B	7.35	14.36%	―	2.38%	9.88%
PAYO	74 Outperform	$2.58B	24.05	15.97%	―	14.86%	-0.94%
PAY	73 Outperform	$4.99B	100.58	10.80%	―	47.78%	74.61%
MQ	71 Outperform	$2.45B	52.24	5.01%	―	-8.44%	―
STNE	61 Neutral	$3.64B	8.73	-8.85%	―	-14.03%	-167.03%
Sector *	60 Neutral	$11.59B	10.34	-7.15%	2.94%	7.49%	-10.88%

* Technology Sector Average

Performance Comparison

PAGS

Pagseguro Digital

9.01

-4.01

-30.80%

STNE

Stoneco

13.36

-1.81

-11.93%

PAYO

Payoneer

7.19

1.23

20.64%

PAY

Paymentus Holdings

39.50

20.94

112.82%

Marqeta

5.22

-0.19

-3.51%

DLO

DLocal

11.66

2.24

23.78%

Pagseguro Digital Earnings Call Summary

Earnings Call Date:May 13, 2025

(Q4-2024)

% Change Since: -8.71%|

Next Earnings Date:Aug 21, 2025

Earnings Call Sentiment Positive

The earnings call demonstrated a robust performance with record TPV growth, increased net income, and strong client acquisition. Despite challenges like a higher-than-expected SELIC rate and concerns around transaction yields, the company effectively implemented strategies such as repricing and cost of funding reduction to maintain profitability.

Q4-2024 Updates

Positive Updates

Record TPV Growth

Total Payment Volume (TPV) reached a record of BRL 518 billion, representing a 32% year-over-year growth.

Strong Client Growth

PagBank ended the year with 33.2 million clients, adding 2.1 million year-over-year.

Net Income and EPS Increase

Net income reached BRL 2.3 billion, a 28% growth compared to 2023, with diluted EPS growing 30%.

Banking Revenue Surge

Banking revenue set a record of BRL 513 million, growing 58% year-over-year, with gross profit from the banking segment increasing by 80%.

Successful Repricing Strategy

Strategic repricing helped mitigate the impact of higher interest rates and contributed to managing the product mix impact.

Cost of Funding Reduction

The APY for total deposits decreased by 400 basis points compared to Q4 '23, reducing the total cost of deposits to 90% of the CDI.

Negative Updates

High SELIC Rate Impact

Contrary to initial projections, the SELIC rate ended more than 300 basis points higher than anticipated, affecting financial costs.

Transaction Yield Concerns

Transaction activities revenue decreased by 8% year-over-year, suggesting a lower take rate, partly attributed to PIX and client mix changes.

Company Guidance

During the fourth quarter of 2024 earnings call for PagSeguro Digital, the company reported impressive financial performance and provided guidance for 2025. The company ended the year with 33.2 million clients, an increase of 2.1 million year-over-year. Their payment TPV reached a record BRL 518 billion, marking a 32% growth from the previous year. Net revenues rose by 18% to BRL 18.8 billion, while net income hit an all-time high of BRL 2.3 billion, a 28% increase compared to 2023. The diluted EPS on a GAAP basis climbed to BRL 6.62, representing a 30% growth. PagSeguro's return on average equity improved by 198 basis points year-over-year to 15.2%. For 2025, the company provided guidance with expectations of gross profit growth between 7% and 11%, earnings per share growth between 11% and 15%, and capital expenditures ranging from BRL 2.2 billion to BRL 2.4 billion. The company's strategic initiatives focused on increasing revenues, enhancing shareholder value, and optimizing cost structures to navigate the challenging macroeconomic environment.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.