Critical Analysis: PagSeguro Digital (NYSE:PAGS) vs. DoubleDown Interactive (NASDAQ:DDI)

PagSeguro Digital (NYSE:PAGS) and DoubleDown Interactive (NASDAQ:DDI) are both business services companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, profitability, institutional ownership, valuation, earnings and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PagSeguro Digital	11.12%	15.49%	3.49%
DoubleDown Interactive	36.37%	15.52%	14.31%

Valuation & Earnings

This table compares PagSeguro Digital and DoubleDown Interactive”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PagSeguro Digital	$18.84 billion	0.15	$331.23 million	$1.22	7.03
DoubleDown Interactive	$336.68 million	1.47	$124.02 million	$2.38	4.19

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

Institutional and Insider Ownership

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

Analyst Recommendations

This is a breakdown of recent ratings for PagSeguro Digital and DoubleDown Interactive, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagSeguro Digital	1	4	5	1	2.55
DoubleDown Interactive	0	0	3	0	3.00

PagSeguro Digital currently has a consensus target price of $11.63, indicating a potential upside of 35.57%. DoubleDown Interactive has a consensus target price of $20.33, indicating a potential upside of 103.74%. Given DoubleDown Interactive’s stronger consensus rating and higher possible upside, analysts clearly believe DoubleDown Interactive is more favorable than PagSeguro Digital.

Risk & Volatility

PagSeguro Digital has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500. Comparatively, DoubleDown Interactive has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

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.

About DoubleDown Interactive

DoubleDown Interactive Co., Ltd. engages in the development and publishing of casual games and mobile applications in South Korea. It publishes digital gaming content on mobile and web platforms. The company offers DoubleDown Casino, DoubleDown Classic, DoubleDown Fort Knox, and cash me out games, as well as sells in-game virtual chips. Its games are primarily distributed, marketed, and promoted through third party platform providers. The company was formerly known as The8Games Co., Ltd. and changed its name to DoubleDown Interactive Co., Ltd. in December 2019. The company was incorporated in 2008 and is headquartered in Seoul, South Korea. DoubleDown Interactive Co., Ltd. is a subsidiary of DoubleU Games Co., Ltd.