PagSeguro Digital (NYSE:PAGS) vs. Freedom (NASDAQ:FRHC) Critical Contrast

Freedom (NASDAQ:FRHC) and PagSeguro Digital (NYSE:PAGS) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Insider & Institutional Ownership

1.3% of Freedom shares are owned by institutional investors. Comparatively, 45.9% of PagSeguro Digital shares are owned by institutional investors. 69.8% of Freedom shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Freedom has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, PagSeguro Digital has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Valuation & Earnings

This table compares Freedom and PagSeguro Digital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freedom	$2.19 billion	4.26	$153.33 million	$2.53	57.89
PagSeguro Digital	$3.65 billion	0.67	$379.40 million	$1.43	6.10

PagSeguro Digital has higher revenue and earnings than Freedom. PagSeguro Digital is trading at a lower price-to-earnings ratio than Freedom, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Freedom and PagSeguro Digital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freedom	6.47%	10.96%	1.24%
PagSeguro Digital	10.46%	16.36%	3.25%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Freedom and PagSeguro Digital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freedom	0	2	1	0	2.33
PagSeguro Digital	1	6	2	0	2.11

Freedom currently has a consensus target price of $159.00, suggesting a potential upside of 8.57%. PagSeguro Digital has a consensus target price of $10.98, suggesting a potential upside of 25.98%. Given PagSeguro Digital’s higher possible upside, analysts clearly believe PagSeguro Digital is more favorable than Freedom.

Summary

PagSeguro Digital beats Freedom on 9 of the 14 factors compared between the two stocks.

About Freedom

Freedom Holding Corp., through its subsidiaries, provides securities brokerage, securities dealing, market making, investment research, investment counseling, and investment banking services. It offers retail brokerage services for exchange-traded and over-the-counter corporate equity and debt securities, money market instruments, exchange traded options and futures contracts, government bonds, and mutual funds; securities trading; underwriting services; margin lending services collateralized by securities and cash in the customer’s account; various investment education and training courses; investment research services; and commercial banking services, including payment cards, digital mortgages, and digital business and digital auto loans, as well as Freedom Box, a package of payment acquiring services. The company also provides capital raising solutions for corporate clients through initial public offerings and follow-on offerings; and debt capital markets solutions that focuses on structuring and distributing private and public debt for various purposes, including buyouts, acquisitions, growth capital financings, and recapitalizations, as well as information processing services. In addition, it facilitates repurchase and reverse repurchase agreements in proprietary trading activities; and covers short positions and settle other securities obligations to accommodate customers’ needs and finance its inventory positions. Further, the company offers proprietary trading and investment services, as well as insurance products; and Tradernet software platform for client margin risk evaluation and middle office security transfer requests. It operates in Central Asia, Eastern Europe, rest of Europe, the United States, Russia, the Middle East, and Caucasus. The company was formerly known as BMB Munai, Inc. and changed its name to Freedom Holding Corp. Freedom Holding Corp. was incorporated in 1981 and is headquartered in Almaty, Kazakhstan.

About PagSeguro Digital

PagSeguro 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 payment and 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, POS app, i-Banking App, Super App, and e-commerce support and bill payment services; and PedeFácil, an order management and food delivery app. 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.