PagSeguro Digital (PAGS) Surges 21.4%: Is This an Indication of Further Gains?

PagSeguro Digital Ltd. (PAGS) shares ended the last trading session 21.4% higher at $10.95. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 7.3% loss over the past four weeks.

PagSeguro retained its rally for the second straight day, driven by strength in its technology-led platform that combines payments, digital banking, cards, investments, insurance and software through a single interface. The company also operates an acquiring network with broad acceptance across Brazil and supports in-person, online and cross-border payments, strengthening its ability to serve both merchants and consumers efficiently at scale.

PAGS also benefits from broad customer-acquisition capabilities and strong brand reach. Its online strategy leverages its partnership with UOL, which reaches 73% of Brazil’s internet audience, while its HUB-based salesforce covers 100% of the country’s GDP. Recently, PagSeguro shares might have received an impetus after Brazil’s first-round presidential election outcome raised expectations of a shift toward tighter fiscal policy and greater spending discipline.

This company is expected to post quarterly earnings of $0.41 per share in its upcoming report, which represents a year-over-year change of +13.9%. Revenues are expected to be $996.2 million, up 6.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For PagSeguro Digital, the consensus EPS estimate for the quarter has been revised 4.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on PAGS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

PagSeguro Digital belongs to the Zacks Financial Transaction Services industry. Another stock from the same industry, Fidelity National Information Services (FIS), closed the last trading session 3.5% higher at $33.58. Over the past month, FIS has returned -22.6%.

For Fidelity National, the consensus EPS estimate for the upcoming report has changed +0.1% over the past month to $1.61. This represents a change of +6.6% from what the company reported a year ago. Fidelity National currently has a Zacks Rank of #4 (Sell).

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This article originally published on Zacks Investment Research (zacks.com).

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