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There's been a notable change in appetite for PagSeguro Digital Ltd. (NYSE:PAGS) shares in the week since its yearly report, with the stock down 14% to US$31.37. PagSeguro Digital reported in line with analyst predictions, delivering revenues of R$5.7b and statutory earnings per share of R$4.15, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on PagSeguro Digital after the latest results.
After the latest results, the twelve analysts covering PagSeguro Digital are now predicting revenues of R$7.16b in 2020. If met, this would reflect a sizeable 26% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to surge 29% to R$5.38. In the lead-up to this report, analysts had been modelling revenues of R$7.19b and earnings per share (EPS) of R$5.42 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of R$190, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on PagSeguro Digital, with the most bullish analyst valuing it at R$236 and the most bearish at R$126 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
In addition, we can look to PagSeguro Digital's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect PagSeguro Digital's revenue growth will slow down substantially, with revenues next year expected to grow 26%, compared to a historical growth rate of 44% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% next year. So it's pretty clear that, while PagSeguro Digital's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple PagSeguro Digital analysts - going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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