PagSeguro Digital Ltd. (NYSE:PAGS) is an electronic payments company focusing on micro, small, and medium-sized merchants in Brazil. PAGS is a subsidiary of Universo Online S.A., (UOL), a large Brazilian online content and digital services company.
PAGS went public in January 2018, and, as of 10/25/19, its stock price had advanced over 32%. PAGS is up nearly 105% year-to-date.
Via https://newsapi.org online business online marketing online business opportunities Business Description
PAGS electronic payments platform allows merchants to receive payments from consumers as well as serve as a means to manage the financial operations of the business without the need for a bank account. Key to the functioning of the platform is PAGS free digital accounts where consumers and merchants may receive, maintain, or transfer cash balances. The digital accounts accommodate cash-in transfers from 35 different sources, including website checkout options, in-person payment, credit cards, bank transfers, and meal and payment vouchers issued by Brazilian employers. Money can be transferred within the platform via digital accounts and can be transferred out via online purchases, cash withdrawals, and transfer to bank accounts.
Via https://newsapi.org online business online marketing online business opportunities Targeting an Underserved Market
Brazil has 7.9 millionindividual micro-entrepreneurs, 4.5 million micro-companies, 0.5 million small and medium companies, and 40,000 large companies, representing a large potential market for PAGS payment solutions. The number of individual entrepreneurs grew by one million per year from 2010 through 2017.
Via https://newsapi.org online business online marketing online business opportunitiesPagBank – A Potential Driver of Growth
PAGS is expanding its offering of financial services to include banking through its PagBank offering, which includes savings accounts as well as the issuance of credit, debit, and prepaid cash cards.
The company estimatesthat there are 68 million people in Brazil without bank accounts. 40% and 65% of paychecks and bills, respectively, are paid in cash. The company’s research indicates that more than half of those are interested in digital banking services.
Via https://newsapi.org online business online marketing online business opportunities Plugged-In Population
PAGS may continue to benefit from a population that is digitally plugged in. Smartphone coverage in Brazil is 71%. 4G coverage is available to 96% of the country’s population. Brazil has the fifth-largest number of internet users in the world and spends nearly 283 minutes online per day.
Via https://newsapi.org online business online marketing online business opportunities PAGS Has Experienced Strong Growth
Active merchants on the company’s platform increased nearly 35% to 4.7 million when compared to the second quarter of 2018. Total unique accounts totaled 9.4 million as of 6/30/19. Total payment volume increased nearly 60% to R$ 26.7 billion over the same time period, while average spending per merchant increased 15%.
Revenues for the second quarter were R$ 1.3 billion, a 53% increase over the second quarter 2018 while net income increased by 42% to R$ 343 million.
Via https://newsapi.org online business online marketing online business opportunities Valuation
PAGS is not a cheap stock. Its trailing and forward P/E are 54.6 and 25.5, respectively, while its P/B is 7.6. However, these valuations are in line with other leading emerging markets ecommerce companies.
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The company operates in a highly-competitive marketplace in which there are multiple firms that offer similar services. The firm also faces cybersecurity risks. The firm and the firm’s customers are highly vulnerable to the economic cycle. A weak economy may negatively affect the company.
Via https://newsapi.org online business online marketing online business opportunities Summary
PagSeguro has experienced strong growth by creating products that target an underserved market. PAGS offers an electronic payments platform for small and medium-sized firms. The company continues to expand its product line to better serve its markets as well as continue its growth trajectory.
Disclosure:I am/we are long PAGS.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.