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

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Evertec and PayPal, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Evertec	0	5	2	0	2.29
PayPal	5	32	8	0	2.07

Evertec currently has a consensus target price of $33.20, indicating a potential upside of 36.37%. PayPal has a consensus target price of $55.85, indicating a potential upside of 25.71%. Given Evertec’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Evertec is more favorable than PayPal.

Profitability

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

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

Dividends

Evertec pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. PayPal pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. Evertec pays out 9.7% of its earnings in the form of a dividend. PayPal pays out 10.5% 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.

Volatility & Risk

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

Insider & Institutional Ownership

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

Valuation and Earnings

This table compares Evertec and PayPal”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Evertec	$931.82 million	1.61	$141.59 million	$2.07	11.76
PayPal	$33.17 billion	1.18	$5.23 billion	$5.33	8.34

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.

Summary

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

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.

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.