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Why PagSeguro Stock Popped 11% on Friday

Rich Smith, The Motley Fool

What happened

Shares of Brazilian online payments processor and recent initial public offering (IPO) PagSeguro Digital (NYSE: PAGS) have been on a tear -- up 74% over the past year. Friday was yet another good day for the company, with PagSeguro stock closing the day up 10.8% after reporting earnings Thursday.

PagSeguro reported per-share pro forma profits of $0.26 for fiscal Q2 2019, matching consensus estimates. Quarterly sales of $348 million topped expectations for $332 million. 

Note that different data providers give different numbers for PagSeguro's revenues, probably depending on the exchange rate used and the time it's calculated. S&P Global Market Intelligence, for example, tallies PagSeguro's Q2 revenue at $355 million -- also ahead of expectations. 

Brazilian flag.

Image source: Getty Images.

So what

Calculated in terms of Brazilian reals, PagSeguro said its "non-GAAP [generally accepted accounting principles] total net revenue" climbed 43% year over year, and "non-GAAP net income" was up 42%. Non-GAAP net profit margins declined less than 10 basis points, which explains why income appears to have grown slightly slower than sales. 

From a GAAP point of view, meanwhile, S&P Global puts PagSeguro's sales growth at an even more impressive 127% year over year, with profits up 37%.

Now what

As you can see, there's some confusion about precisely how well PagSeguro performed last quarter. What isn't in dispute is that the business is growing briskly.

Total active merchants using the payments platform climbed 35% year over year. It's also pretty clear that analysts think the growth will continue. Next quarter, Wall Street predicts PagSeguro will grow its sales another 27%, to $377.8 million, and grow its earnings 24%, to $0.31 per share.


Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends PagSeguro Digital. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com