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PAGS vs. ADYEY: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors interested in Financial Transaction Services stocks are likely familiar with PagSeguro Digital Ltd. (PAGS) and Adyen N.V. Unsponsored ADR (ADYEY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, PagSeguro Digital Ltd. has a Zacks Rank of #2 (Buy), while Adyen N.V. Unsponsored ADR has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PAGS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PAGS currently has a forward P/E ratio of 15.86, while ADYEY has a forward P/E of 60.19. We also note that PAGS has a PEG ratio of 0.68. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ADYEY currently has a PEG ratio of 1.86.

Another notable valuation metric for PAGS is its P/B ratio of 2.41. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ADYEY has a P/B of 27.54.

These metrics, and several others, help PAGS earn a Value grade of A, while ADYEY has been given a Value grade of F.

PAGS stands above ADYEY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PAGS is the superior value option right now.


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PagSeguro Digital Ltd. (PAGS) : Free Stock Analysis Report
 
Adyen N.V. Unsponsored ADR (ADYEY) : Free Stock Analysis Report
 
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Zacks Investment Research