Critical Review: DLocal (NASDAQ:DLO) versus Fiserv (NYSE:FI)

Fiserv (NYSE:FI) and DLocal (NASDAQ:DLO) are both business services companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Institutional and Insider Ownership

91.0% of Fiserv shares are held by institutional investors. Comparatively, 90.1% of DLocal shares are held by institutional investors. 0.8% of Fiserv shares are held by company insiders. Comparatively, 45.4% of DLocal shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Fiserv and DLocal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fiserv	0	4	20	2	2.92
DLocal	0	7	2	0	2.22

Fiserv currently has a consensus target price of $214.29, suggesting a potential downside of 3.02%. DLocal has a consensus target price of $12.61, suggesting a potential upside of 10.24%. Given DLocal’s higher possible upside, analysts clearly believe DLocal is more favorable than Fiserv.

Risk and Volatility

Fiserv has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, DLocal has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fiserv	$19.09 billion	6.58	$3.07 billion	$5.20	42.49
DLocal	$650.35 million	5.21	$148.96 million	$0.40	28.60

Fiserv has higher revenue and earnings than DLocal. DLocal is trading at a lower price-to-earnings ratio than Fiserv, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fiserv and DLocal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fiserv	15.22%	17.10%	5.61%
DLocal	16.35%	32.59%	12.95%

Summary

Fiserv beats DLocal on 10 of the 15 factors compared between the two stocks.

About Fiserv

Fiserv, Inc., together with its subsidiaries, provides payments and financial services technology services in the United States, Europe, the Middle East and Africa, Latin America, the Asia-Pacific, and internationally. It operates through Merchant Acceptance, Financial Technology, and Payments and Network segments. The Merchant Acceptance segment provides merchant acquiring and digital commerce services; mobile payment services; security and fraud protection products; Clover, a cloud based POS and integrated commerce operating system for small and mid-sized businesses and independent software vendors; and Carat, an integrated operating system for large businesses. This segment distributes through various channels, including direct sales teams, strategic partnerships with agent sales forces, independent software vendors, financial institutions, and other strategic partners in the form of joint venture alliances, revenue sharing alliances, and referral agreement. The Financial Technology segment offers customer deposit and loan accounts, as well as manages an institution's general ledger and central information files. This segment also provides digital banking, financial and risk management, professional services and consulting, check processing, and other products and services. The Payments and Network segment offers card transactions, such as debit, credit, and prepaid card processing and services; funds access, debit payments, cardless ATM access, and surcharge-free ATM network; security and fraud protection products; card production; print services; and various network services, as well as non-card digital payment software and services, including bill payment, account-to-account transfers, person-to-person payments, electronic billing, and security and fraud protection products. It serves merchants, banks, credit unions, other financial institutions, and corporate clients. Fiserv, Inc. was incorporated in 1984 and is headquartered in Milwaukee, Wisconsin.

About DLocal

DLocal Limited operates a payment processing platform worldwide. The company offers pay-in solution which the business and get paid for their products and services through various payment methods, including international and local cards, online bank transfers and direct debit, cash, and alternative payment methods. It also provides pay-out solution used for merchants to scale pay-out operations. In addition, the company offers dLocal for Platforms, an end-to-end payment solution that offers a range of services to help platforms manage payments. It serves its products to commerce, streaming, ride-hailing, financial services, advertising, SaaS, travel, e-learning, on-demand delivery, and gaming and crypto industries. DLocal Limited was founded in 2016 and is headquartered in Montevideo, Uruguay.