Analyzing PayPal (NASDAQ:PYPL) & Evertec (NYSE:EVTC)

PayPal (NASDAQ:PYPL) and Evertec (NYSE:EVTC) are both business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, analyst recommendations, profitability, dividends and valuation.

Analyst Recommendations

This is a summary of current recommendations and price targets for PayPal and Evertec, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PayPal	5	32	8	0	2.07
Evertec	1	4	2	0	2.14

PayPal currently has a consensus price target of $55.85, indicating a potential upside of 27.63%. Evertec has a consensus price target of $33.20, indicating a potential upside of 39.08%. Given Evertec’s stronger consensus rating and higher probable upside, analysts plainly believe Evertec is more favorable than PayPal.

Earnings and Valuation

This table compares PayPal and Evertec”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PayPal	$33.17 billion	1.16	$5.23 billion	$5.33	8.21
Evertec	$931.82 million	1.58	$141.59 million	$2.07	11.53

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

Dividends

PayPal pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. Evertec pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. PayPal pays out 10.5% of its earnings in the form of a dividend. Evertec pays out 9.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares PayPal and Evertec’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PayPal	15.00%	25.02%	6.30%
Evertec	13.95%	31.40%	9.36%

Volatility & Risk

PayPal has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500. Comparatively, Evertec has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Insider & Institutional Ownership

68.3% of PayPal shares are owned by institutional investors. Comparatively, 96.8% of Evertec shares are owned by institutional investors. 0.6% of PayPal shares are owned by company insiders. Comparatively, 1.1% of Evertec shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Evertec beats PayPal on 9 of the 16 factors compared between the two stocks.

About PayPal

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. The company provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, California.

About Evertec

EVERTEC, Inc. engages in transaction processing business and financial technology in Latin America and the Caribbean. The company operates through four segments: Payment Services – Puerto Rico & Caribbean; Latin America Payments and Solutions; Merchant Acquiring; and Business Solutions. It provides merchant acquiring services, which enable point of sales and e-commerce merchants to accept and process electronic methods of payment, such as debit, credit, prepaid, and electronic benefit transfer (EBT) cards. In addition, the company offers payment processing services that enable financial institutions and other issuers to manage, support, and facilitate the processing for credit, debit, prepaid, automated teller machines, and EBT card programs; credit and debit card processing, authorization and settlement, and fraud monitoring and control services to debit or credit issuers services. Further, it provides business process management solutions comprising core bank processing, network hosting and management, IT professional, business process outsourcing, item and cash processing, and fulfillment solutions to merchant, fintech, financial institutions, and corporate and government customers. Additionally, the company owns and operates the ATH network, a personal identification number debit networks. It manages a system of electronic payment networks that process approximately six billion transactions. The company sells and distributes its services primarily through direct sales force. It serves financial institutions, merchants, corporations, and government agencies. EVERTEC, Inc. was founded in 1988 and is headquartered in San Juan, Puerto Rico.