Head to Head Contrast: PayPal (NASDAQ:PYPL) & FirstCash (NASDAQ:FCFS)

PayPal (NASDAQ:PYPL) and FirstCash (NASDAQ:FCFS) are both business services companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Institutional and Insider Ownership

68.3% of PayPal shares are held by institutional investors. Comparatively, 80.3% of FirstCash shares are held by institutional investors. 0.1% of PayPal shares are held by insiders. Comparatively, 14.8% of FirstCash shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PayPal	14.96%	25.64%	6.45%
FirstCash	8.88%	17.44%	7.92%

Dividends

PayPal pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. FirstCash pays an annual dividend of $1.68 per share and has a dividend yield of 1.0%. PayPal pays out 11.2% of its earnings in the form of a dividend. FirstCash pays out 24.2% 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. FirstCash has increased its dividend for 8 consecutive years. PayPal is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for PayPal and FirstCash, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PayPal	6	24	12	0	2.14
FirstCash	0	2	4	1	2.86

PayPal currently has a consensus target price of $73.10, suggesting a potential upside of 38.74%. FirstCash has a consensus target price of $167.00, suggesting a potential downside of 2.05%. Given PayPal’s higher probable upside, equities analysts clearly believe PayPal is more favorable than FirstCash.

Risk & Volatility

PayPal has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500. Comparatively, FirstCash has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Valuation & Earnings

This table compares PayPal and FirstCash”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PayPal	$31.80 billion	1.55	$4.15 billion	$4.99	10.56
FirstCash	$3.39 billion	2.22	$258.82 million	$6.93	24.60

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

FirstCash Holdings, Inc, together with its subsidiaries, operates retail pawn stores in the United States, Mexico, and rest of Latin America. The company operates in three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions segments. Its pawn stores lend money on the collateral of pledged personal property, including jewelry, electronics, tools, appliances, sporting goods, and musical instruments; and retails merchandise acquired through collateral forfeitures on forfeited pawn loans and over-the-counter purchases of merchandise directly from customers. The company also provides retail POS payment solutions, which focuses on LTO products and facilitating other retail financing payment options across the network of traditional and e-commerce merchant partners. It serves cash and credit-constrained consumers. The company was formerly known as FirstCash, Inc and changed its name to FirstCash Holdings, Inc. in December 2021. FirstCash Holdings, Inc was incorporated in 1988 and is headquartered in Fort Worth, Texas.