Earnings

Comparing Top Moving Stocks PagSeguro Digital Ltd. (PAGS), Uniti Group Inc. (UNIT)

The shares of PagSeguro Digital Ltd. have decreased by more than -12.88% this year alone. The shares recently went down by -9.11% or -$2.55 and now trades at $25.44. The shares of Uniti Group Inc. (NASDAQ:UNIT), has jumped by 11.64% year to date as of 11/08/2018. The shares currently trade at $19.86 and have been able to report a change of 0.40% over the past one week.

The stock of PagSeguro Digital Ltd. and Uniti Group Inc. were two of the most active stocks on Thursday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: 16.02% versus 15.50%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that PAGS will grow it’s earning at a 16.02% annual rate in the next 5 years. This is in contrast to UNIT which will have a positive growth at a 15.50% annual rate. This means that the higher growth rate of PAGS implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. The ROI of PAGS is 68.70% while that of UNIT is 8.70%. These figures suggest that PAGS ventures generate a higher ROI than that of UNIT.

Cash Flow



The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, PAGS’s free cash flow per share is a negative -0.01, while that of UNIT is also a negative -0.01.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for PAGS is 2.70 and that of UNIT is 0.20. This implies that it is easier for PAGS to cover its immediate obligations over the next 12 months than UNIT.

Valuation

PAGS currently trades at a forward P/E of 20.03, a P/B of 4.85, and a P/S of 9.20 while UNIT trades at a forward P/E of 89.86, and a P/S of 3.50. This means that looking at the earnings, book values and sales basis, PAGS is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions




The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of PAGS is currently at a -23.53% to its one-year price target of 33.27. Looking at its rival pricing, UNIT is at a -10.74% relative to its price target of 22.25.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), PAGS is given a 2.70 while 2.50 placed for UNIT. This means that analysts are more bullish on the outlook for PAGS stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for PAGS is 5.79 while that of UNIT is just 7.18. This means that analysts are more bullish on the forecast for PAGS stock.

Conclusion

The stock of Uniti Group Inc. defeats that of PagSeguro Digital Ltd. when the two are compared, with UNIT taking 6 out of the total factors that were been considered. UNIT happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, UNIT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for UNIT is better on when it is viewed on short interest.

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