Is PagSeguro Still Attractive After a 57% Rally in 2025?
- Wondering if PagSeguro Digital at around $10 a share is still a bargain or if the easy money has already been made? This breakdown is designed to help you figure out where the value really sits.
- Despite slipping 2.8% over the last week, the stock is still up 1.5% over the past month, 57.3% year to date and 51.4% over the last year, even after a tough 5 year stretch where it is still down 80.7% from earlier highs.
- Recent moves have been shaped by shifting sentiment around Brazilian fintechs, as investors weigh improving digital payments adoption against competition from both banks and newer platforms. Broader Latin American tech plays have also seen renewed interest as global risk appetite returns, helping to re-rate names like PagSeguro without fully closing the valuation gap.
- On our checks, PagSeguro scores a 5/6 valuation score, suggesting it still screens as undervalued on most fronts. Next we will walk through those methods and then finish with a more holistic way to think about what the market might be missing.
Approach 1: PagSeguro Digital Excess Returns Analysis
The Excess Returns model looks at how much profit PagSeguro can generate above the minimum return investors demand on its equity, then capitalizes those “excess” profits into an intrinsic value per share.
For PagSeguro, the starting point is a Book Value of $51.16 per share and a Stable EPS of $9.07 per share, based on weighted future return on equity estimates from 10 analysts. With an Average Return on Equity of 16.10% and a Cost of Equity of $6.02 per share, the company is expected to earn an Excess Return of $3.05 per share on its equity base. Analysts also see Stable Book Value rising to $56.31 per share, supported by estimates from 6 analysts.
When these excess returns are projected forward and discounted, the model arrives at an intrinsic value of about $17.79 per share. Compared with a current share price near $10, this implies the stock is roughly 43.3% undervalued, suggesting the market is not fully pricing in PagSeguro’s ability to earn above its cost of equity.
Result: UNDERVALUED
Our Excess Returns analysis suggests PagSeguro Digital is undervalued by 43.3%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.
Approach 2: PagSeguro Digital Price vs Earnings
For profitable businesses like PagSeguro, the price to earnings (PE) ratio is a practical way to gauge whether investors are paying a reasonable price for each dollar of current profits. In general, faster growing, lower risk companies tend to have higher PE ratios, while slower growing, more volatile names usually trade on lower multiples.
PagSeguro currently trades on a PE of about 7.25x, which is well below both the diversified financial industry average of roughly 13.56x and the broader peer group, which sits near 46.92x. That discount hints at skepticism about the durability of the company’s earnings, its competitive position, or country and regulatory risks that investors still price in.
Simply Wall St’s Fair Ratio framework goes a step further by estimating what PE multiple a stock might command given its specific earnings growth profile, profitability, industry, market cap and risk factors. For PagSeguro, this Fair Ratio comes out at about 16.34x, indicating that the shares could warrant a materially higher multiple than today’s 7.25x if the market fully credited those fundamentals. On this basis, the stock still screens as undervalued on an earnings multiple approach.
Result: UNDERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your PagSeguro Digital Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of PagSeguro Digital’s story with explicit forecasts for its future revenue, earnings and margins, and then translate that into a fair value you can compare to today’s share price. On Simply Wall St’s Community page, used by millions of investors, Narratives let you spell out why you think, for example, PagSeguro’s improving capital returns and margin gains justify a higher fair value around $13.98, or why concerns about competition, execution risk and growth might instead anchor your view closer to a cautious $5.17. Each Narrative links that story to a dynamic financial model and a resulting fair value, so you can quickly see whether your assumptions point to the stock being a buy, a hold or a sell at the current price. As new information comes in, like earnings results, news or guidance changes, those underlying numbers and the gap between Fair Value and Price can update automatically, helping you keep your investment thesis current with far less effort.
Do you think there's more to the story for PagSeguro Digital? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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