Pagseguro Digital (PAGS) AI Stock Analysis

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Pagseguro Digital

(NYSE:PAGS)

Rating:75Outperform

Price Target:

$10.50

▲(11.58%Upside)

Pagseguro Digital's overall stock score reflects a balanced outlook. The company's strong revenue growth and attractive valuation are major positives. However, significant financial risks due to high leverage and cash flow challenges need addressing. Technical indicators support a positive trend in stock performance, suggesting potential for further gains if financial risks are managed effectively.

Positive Factors

Dividends and Shareholder Returns

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

Loan Portfolio Growth

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

Revenue and Income Growth

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

Negative Factors

Financial Expenses

Financial expenses expanded 42% YoY, reflecting higher average Selic.

Market Competition

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

TPV and Revenue Expectations

Total revenue net of funding costs was slightly below expectations, partially due to lower TPV.

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

Market Cap

$3.10B

Dividend Yield1.49%

Average Volume (3M)6.81M

Price to Earnings (P/E)7.7

Beta (1Y)1.16

Revenue Growth2.38%

EPS Growth9.88%

CountryUS

Employees6,751

SectorTechnology

Sector Strength87

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.32

Shares Outstanding209,148,910

10 Day Avg. Volume6,011,490

30 Day Avg. Volume6,811,017

Financial Highlights & Ratios

PEG Ratio2.29

Price to Book (P/B)1.05

Price to Sales (P/S)0.00

P/FCF Ratio-2.65

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$10.67

Price Target Upside13.39% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

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 model primarily focused on transaction fees, sales of POS devices, and financial services. The company earns a significant portion of its income by charging merchants transaction fees for processing payments through its platform, both online and offline. Additionally, PagSeguro sells POS devices to small and medium-sized businesses, which contribute to its revenue. The company also offers financial services such as PagBank, its digital banking platform, which provides services like digital accounts, prepaid cards, and credit offerings. Strategic partnerships with e-commerce platforms and financial institutions further enhance PagSeguro's ability to reach a wider customer base and drive revenue growth.

Pagseguro Digital Key Performance Indicators (KPIs)

Any

Total Clients

Total Clients
Counts the number of clients using the company's services, providing insight into market reach and customer acquisition success.

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 Earnings Call Summary

Earnings Call Date:May 13, 2025

(Q4-2024)

% Change Since: -3.09%|

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.

Pagseguro Digital Financial Statement Overview

Summary

Pagseguro Digital shows strong revenue growth with a healthy gross profit margin of 48.3% and solid operational efficiency. However, high leverage, with a debt-to-equity ratio of 2.56, and cash flow challenges present financial risks. The negative operating and free cash flow highlight the need for improved cash management. Overall, the company has growth potential but must address leverage and liquidity issues to ensure stability.

Income Statement

Positive

Pagseguro Digital shows strong revenue growth with a significant increase from previous years, particularly in TTM (Trailing-Twelve-Months), reflecting robust business expansion. The Gross Profit Margin is healthy at around 48.3%, indicating efficient cost management. Net Profit Margin is stable at approximately 11.5%, but there's room for improvement. EBIT and EBITDA margins are solid, suggesting strong operational efficiency. Overall, the income statement reflects a positive growth trajectory, albeit with some challenges in net profitability.

Balance Sheet

Positive

The balance sheet displays a high debt-to-equity ratio of 2.56, which indicates significant leverage and potential financial risk. The equity ratio is moderate at 21.6%, suggesting a balanced asset financing structure. Return on Equity (ROE) is reasonable, showing effective use of shareholder funds, but high liabilities could pose long-term risks. Overall, while the company maintains a stable asset base, the high leverage warrants attention.

Cash Flow

Neutral

Pagseguro Digital's cash flow statement reveals challenges, with a negative Operating Cash Flow and Free Cash Flow in TTM, reflecting cash management issues. The Free Cash Flow to Net Income ratio is negative, indicating cash flow difficulties despite positive net income. While historical cash flow trends show periods of positive free cash flow, recent figures highlight the need for improved cash conversion. Overall, the cash flow position requires strategic improvements to enhance liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	18.84B	18.33B	15.68B	15.16B	10.30B	6.69B
Gross Profit	9.11B	8.79B	7.55B	7.69B	4.52B	2.91B
EBITDA	8.01B	7.54B	6.72B	6.19B	2.89B	2.11B
Net Income	2.16B	2.12B	1.65B	1.50B	1.17B	1.29B
Balance Sheet
Total Assets	69.14B	72.90B	55.11B	45.57B	31.15B	22.32B
Cash, Cash Equivalents and Short-Term Investments	1.61B	1.42B	2.90B	2.95B	2.58B	2.62B
Total Debt	38.25B	4.68B	16.38B	12.12B	4.22B	838.14M
Total Liabilities	54.19B	58.23B	41.87B	33.67B	20.62B	13.00B
Stockholders Equity	14.94B	14.67B	13.24B	11.91B	10.53B	9.32B
Cash Flow
Free Cash Flow	-6.41B	-4.55B	2.01B	1.39B	-883.46M	106.85M
Operating Cash Flow	-4.63B	-3.42B	4.00B	3.59B	929.18M	2.17B
Investing Cash Flow	-988.26M	-1.83B	-2.70B	-2.25B	-1.53B	-1.88B
Financing Cash Flow	2.20B	3.27B	-225.99M	-1.31B	764.59M	-45.09M

Pagseguro Digital Technical Analysis

Technical Analysis Sentiment

Positive

Last Price9.41

Price Trends

50DMA

9.20

Positive

100DMA

8.51

Positive

200DMA

8.02

Positive

Market Momentum

MACD

0.15

Negative

RSI

53.69

Neutral

STOCH

48.94

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAGS, the sentiment is Positive. The current price of 9.41 is above the 20-day moving average (MA) of 9.15, above the 50-day MA of 9.20, and above the 200-day MA of 8.02, indicating a bullish trend. The MACD of 0.15 indicates Negative momentum. The RSI at 53.69 is Neutral, neither overbought nor oversold. The STOCH value of 48.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (69)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLO	81 Outperform	$3.27B	25.35	26.10%	―	―	―
PAYO	75 Outperform	$2.52B	23.34	15.97%	―	14.86%	-0.94%
PAGS	75 Outperform	$3.10B	7.65	14.36%	1.49%	2.38%	9.88%
PAY	70 Neutral	$3.89B	78.36	10.80%	―	47.78%	74.61%
Sector *	69 Neutral	¥228.59B	14.33	7.64%	2.71%	9.13%	8.49%
MQ	68 Neutral	$2.74B	58.42	5.01%	―	-8.44%	―
STNE	64 Neutral	$4.34B	8.73	-8.85%	―	-14.03%	-167.03%

* Technology Sector Average

Performance Comparison

PAGS

Pagseguro Digital

9.41

-2.94

-23.81%

STNE

Stoneco

16.18

3.15

24.17%

PAYO

Payoneer

6.98

1.49

27.14%

PAY

Paymentus Holdings

31.04

11.92

62.34%

Marqeta

5.95

0.52

9.58%

DLO

DLocal

11.45

3.43

42.77%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 28, 2025