Shift4 Payments (NYSE:FOUR) versus Paltalk (NASDAQ:PALT) Critical Analysis

Shift4 Payments (NYSE:FOUR) and Paltalk (NASDAQ:PALT) are both business services companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Shift4 Payments and Paltalk, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shift4 Payments	0	3	18	0	2.86
Paltalk	0	1	0	0	2.00

Shift4 Payments currently has a consensus target price of $100.15, suggesting a potential upside of 3.24%. Paltalk has a consensus target price of $4.50, suggesting a potential upside of 145.90%. Given Paltalk’s higher probable upside, analysts plainly believe Paltalk is more favorable than Shift4 Payments.

Institutional & Insider Ownership

98.9% of Shift4 Payments shares are held by institutional investors. Comparatively, 3.9% of Paltalk shares are held by institutional investors. 30.6% of Shift4 Payments shares are held by company insiders. Comparatively, 18.7% of Paltalk 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.

Volatility and Risk

Shift4 Payments has a beta of 1.64, suggesting that its stock price is 64% more volatile than the S&P 500. Comparatively, Paltalk has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Profitability

This table compares Shift4 Payments and Paltalk’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shift4 Payments	4.04%	23.86%	5.87%
Paltalk	-33.40%	-16.94%	-14.15%

Valuation & Earnings

This table compares Shift4 Payments and Paltalk”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shift4 Payments	$2.56 billion	3.35	$86.20 million	$1.84	52.72
Paltalk	$10.98 million	1.54	-$1.07 million	($0.34)	-5.38

Shift4 Payments has higher revenue and earnings than Paltalk. Paltalk is trading at a lower price-to-earnings ratio than Shift4 Payments, indicating that it is currently the more affordable of the two stocks.

Summary

Shift4 Payments beats Paltalk on 12 of the 13 factors compared between the two stocks.

About Shift4 Payments

Shift4 Payments, Inc. (NYSE FOUR) provides integrated payment processing and technology solutions in the United States. Its payments platform provides omni-channel card acceptance and processing solutions, including end-to-end payment processing for various payment types; merchant acquiring; proprietary omni-channel gateway; complementary software integrations; integrated and mobile point-of-sale (POS) solutions; security and risk management solutions; and reporting and analytical tools, as well as tokenization, risk management/underwriting, payment device and chargeback management, fraud prevention, and gift card solutions. The company also offers suite of technology solutions, such as Lighthouse, a cloud-based business intelligence tool that includes customer engagement, social media management, online reputation management, scheduling, and product pricing, as well as reporting and analytics; integrated POS for merchants business; and Skytab, a mobile payment solution. In addition, it provides marketplace technology that enable seamless integrations into third-party applications, which includes online delivery services, payroll, timekeeping, and other human resource services. Further, the company offers merchant management, training and education, marketing management, and incentives tracking solutions. Additionally, it provides merchant underwriting, onboarding and activation, training, risk management, and support services; and software integrations and compliance management, and partner support and services. The company was founded in 1998 and is headquartered in Allentown, Pennsylvania.

About Paltalk

Paltalk, Inc., together with its subsidiaries, develops communications software and multimedia social applications worldwide. It offers consumer applications, which include Paltalk, Camfrog, and Tinychat for live video chat; and owns and operates Vumber, a telecommunications services provider that enables users to have multiple phone numbers in any area code through which calls can be forwarded to a user’s existing cell phone or land line telephone number. The company provides ManyCam, a live streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing applications, and distance learning tools; and product payment options, where users can pay by credit card, PayPal, western union, check, local e-wallet providers, or complete an in-app purchase through the Apple App Store or Google Play Store for Android users. The company was formerly known as PeerStream, Inc. and changed its name to Paltalk, Inc. in May 2020. Paltalk, Inc. was incorporated in 2005 and is based in Jericho, New York.