Visa (NYSE: V) and PayPal Holdings (NASDAQ:PYPL) are both large-cap business services companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitabiliy, valuation, dividends, earnings and risk.
Risk & Volatility
Visa has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, PayPal Holdings has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.
Earnings and Valuation
This table compares Visa and PayPal Holdings’ top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Visa | $17.76 billion | 12.99 | $12.17 billion | $2.69 | 37.51 |
| PayPal Holdings | $11.76 billion | 6.02 | $2.26 billion | $1.25 | 47.09 |
Visa has higher revenue and earnings than PayPal Holdings. Visa is trading at a lower price-to-earnings ratio than PayPal Holdings, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Visa and PayPal Holdings’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Visa | 36.53% | 30.95% | 12.74% |
| PayPal Holdings | 12.82% | 11.10% | 4.87% |
Insider & Institutional Ownership
82.0% of Visa shares are owned by institutional investors. Comparatively, 81.3% of PayPal Holdings shares are owned by institutional investors. 0.1% of Visa shares are owned by company insiders. Comparatively, 6.0% of PayPal Holdings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Dividends
Visa pays an annual dividend of $0.66 per share and has a dividend yield of 0.7%. PayPal Holdings does not pay a dividend. Visa pays out 24.5% of its earnings in the form of a dividend. Visa has raised its dividend for 8 consecutive years.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Visa and PayPal Holdings, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Visa | 0 | 3 | 24 | 1 | 2.93 |
| PayPal Holdings | 0 | 9 | 29 | 1 | 2.79 |
Visa presently has a consensus target price of $104.73, suggesting a potential upside of 3.81%. PayPal Holdings has a consensus target price of $60.21, suggesting a potential upside of 2.29%. Given Visa’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Visa is more favorable than PayPal Holdings.
Summary
Visa beats PayPal Holdings on 12 of the 17 factors compared between the two stocks.
About Visa
Visa Inc. (Visa) is a payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners and government entities to electronic payments. The Company operates through payment services segment. The Company enables global commerce through the transfer of value and information among the participants. The Company’s transaction processing network facilitates authorization, clearing and settlement of payment transactions and enables to provide its financial institution and merchant clients a range of products, platforms and value-added services. The Company is a retail electronic payment network based on payments volume, number of transactions and number of cards in circulation. Its products/services include core products, processing infrastructure, transaction processing services, digital products, merchant products, and risk products and payment security initiatives.
About PayPal Holdings
PayPal Holdings, Inc. is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants. The Company’s combined payment solutions, including its PayPal, PayPal Credit, Braintree, Venmo, Xoom and Paydiant products, compose its Payments Platform. It operates a two-sided global technology platform that links its customers, both merchants and consumers, around the globe to facilitate the processing of payment transactions, allowing it to connect merchants and consumers. It allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. It enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card or other stored value products. It offers consumers person-to-person payment solutions through its PayPal Website and mobile application, Venmo and Xoom.
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