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PAGS vs. ADYEY: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Financial Transaction Services sector have probably already heard of PagSeguro Digital Ltd. (PAGS - Free Report) and Adyen N.V. Unsponsored ADR (ADYEY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

PagSeguro Digital Ltd. and Adyen N.V. Unsponsored ADR are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PAGS likely has seen a stronger improvement to its earnings outlook than ADYEY has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

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 13.74, while ADYEY has a forward P/E of 53.55. We also note that PAGS has a PEG ratio of 0.59. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ADYEY currently has a PEG ratio of 1.66.

Another notable valuation metric for PAGS is its P/B ratio of 1.98. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ADYEY has a P/B of 24.69.

Based on these metrics and many more, PAGS holds a Value grade of A, while ADYEY has a Value grade of F.

PAGS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PAGS is likely the superior value option right now.

In-Depth Zacks Research for the Tickers Above

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PagSeguro Digital Ltd. (PAGS) - free report >>

Adyen N.V. Unsponsored ADR (ADYEY) - free report >>

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