Financial Review: Alight (NYSE:ALIT) versus PayPal (NASDAQ:PYPL)

PayPal (NASDAQ:PYPL) and Alight (NYSE:ALIT) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PayPal	14.30%	22.82%	5.75%
Alight	-6.58%	5.42%	2.36%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PayPal	$29.77 billion	2.38	$4.25 billion	$3.97	17.49
Alight	$3.36 billion	1.18	-$345.00 million	($0.62)	-11.36

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

Risk and Volatility

PayPal has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500. Comparatively, Alight has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for PayPal and Alight, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PayPal	0	17	19	1	2.57
Alight	0	0	9	0	3.00

PayPal presently has a consensus price target of $75.25, indicating a potential upside of 8.38%. Alight has a consensus price target of $11.17, indicating a potential upside of 58.50%. Given Alight’s stronger consensus rating and higher probable upside, analysts clearly believe Alight is more favorable than PayPal.

Insider & Institutional Ownership

68.3% of PayPal shares are owned by institutional investors. Comparatively, 96.7% of Alight shares are owned by institutional investors. 0.1% of PayPal shares are owned by company insiders. Comparatively, 5.3% of Alight shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

PayPal beats Alight on 11 of the 15 factors compared between the two stocks.

About PayPal

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. The company provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, California.

About Alight

Alight, Inc. provides cloud-based integrated digital human capital and business solutions worldwide. The company operates through two segments, Employer Solutions and Professional Services. The Employer Solutions segment offers employee wellbeing, integrated benefits administration, healthcare navigation, financial wellbeing, leave of absence management, retiree healthcare and payroll; and operates AI-led capabilities software. The Professional Services segment offers consulting offerings, such as cloud advisory, deployment, and optimization services for cloud platforms. The company provides Alight Worklife, an intuitive, cloud-based employee engagement platform. Its solutions enable employees to enrich their health, wealth, and wellbeing that helps organizations achieve a high-performance culture. Alight, Inc. was founded in 2020 and is based in Lincolnshire, Illinois.