PayPal Holdings (NASDAQ: PYPL) and Visa (NYSE:V) are both large-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their profitabiliy, institutional ownership, earnings, risk, valuation, dividends and analyst recommendations.

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 33.0% of its earnings in the form of a dividend. PayPal Holdings has increased its dividend for 8 consecutive years.

Risk & Volatility

PayPal Holdings has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Visa has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Insider and Institutional Ownership

81.5% of PayPal Holdings shares are held by institutional investors. Comparatively, 81.9% of Visa shares are held by institutional investors. 6.0% of PayPal Holdings shares are held by company insiders. Comparatively, 0.1% of Visa shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
PayPal Holdings 12.60% 10.78% 4.81%
Visa 28.78% 29.14% 12.08%

Earnings & Valuation

This table compares PayPal Holdings and Visa’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PayPal Holdings $11.27 billion 6.30 $2.17 billion $1.18 50.08
Visa $16.83 billion 13.45 $11.59 billion $2.00 49.06

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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for PayPal Holdings and Visa, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PayPal Holdings 0 9 27 1 2.78
Visa 0 3 25 1 2.93

PayPal Holdings currently has a consensus price target of $54.74, indicating a potential downside of 7.36%. Visa has a consensus price target of $99.04, indicating a potential upside of 0.95%. Given Visa’s stronger consensus rating and higher possible upside, analysts plainly believe Visa is more favorable than PayPal Holdings.

Summary

Visa beats PayPal Holdings on 11 of the 17 factors compared between the two stocks.

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.

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.

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