Reviewing Upwork (NASDAQ:UPWK) and PagSeguro Digital (NYSE:PAGS)

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

Analyst Recommendations

This is a breakdown of recent recommendations for PagSeguro Digital and Upwork, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagSeguro Digital	1	1	7	0	2.67
Upwork	0	2	8	0	2.80

PagSeguro Digital currently has a consensus target price of $15.11, indicating a potential upside of 66.79%. Upwork has a consensus target price of $15.70, indicating a potential upside of 46.59%. Given PagSeguro Digital’s higher possible upside, equities research analysts plainly believe PagSeguro Digital is more favorable than Upwork.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PagSeguro Digital	10.93%	14.97%	3.56%
Upwork	10.00%	20.75%	7.42%

Valuation & Earnings

This table compares PagSeguro Digital and Upwork”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	$3.19 billion	0.93	$331.23 million	$1.11	8.16
Upwork	$743.73 million	1.92	$46.89 million	$0.35	30.60

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

Volatility & Risk

PagSeguro Digital has a beta of 1.95, indicating that its stock price is 95% more volatile than the S&P 500. Comparatively, Upwork has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500.

Insider & Institutional Ownership

45.9% of PagSeguro Digital shares are owned by institutional investors. Comparatively, 77.7% of Upwork shares are owned by institutional investors. 7.6% of Upwork shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Upwork beats PagSeguro Digital on 8 of the 14 factors compared between the two stocks.

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 Upwork

Upwork Inc., together with its subsidiaries, operates a work marketplace that connects businesses with various independent professionals and agencies in the United States, India, the Philippines, and internationally. The company’s work marketplace provides access to talent with various skills across a range of categories, including administrative support, sales and marketing, design and creative, and customer service, as well as web, mobile, and software development. Its work marketplace also enables clients to streamline workflows, such as talent sourcing, outreach, and contracting. The company’s work marketplace offers access to various functionalities for remote engagements with talent, including communication and collaboration, ability to receive talent invoices through their work marketplace, and payment protection. Its marketplace offerings include Upwork Payroll and Upwork Enterprise, as well as managed and escrow services. The company was formerly known as Elance-oDesk, Inc. and changed its name to Upwork Inc. in May 2015. Upwork Inc. was incorporated in 2013 and is headquartered in San Francisco, California.