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Paypal (PYPL) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Paypal (PYPL) closed the most recent trading day at $182.19, moving +0.32% from the previous trading session. This change outpaced the S&P 500's 0.3% gain on the day. Elsewhere, the Dow gained 0.2%, while the tech-heavy Nasdaq added 0.37%.

Heading into today, shares of the technology platform and digital payments company had lost 10.75% over the past month, lagging the Computer and Technology sector's loss of 5.52% and the S&P 500's loss of 5.02% in that time.

Investors will be hoping for strength from PYPL as it approaches its next earnings release. On that day, PYPL is projected to report earnings of $0.94 per share, which would represent year-over-year growth of 54.1%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.40 billion, up 23.36% from the year-ago period.

PYPL's full-year Zacks Consensus Estimates are calling for earnings of $3.74 per share and revenue of $21.36 billion. These results would represent year-over-year changes of +20.65% and +20.21%, respectively.

Investors might also notice recent changes to analyst estimates for PYPL. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 1.14% higher within the past month. PYPL is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, PYPL currently has a Forward P/E ratio of 48.55. Its industry sports an average Forward P/E of 76.32, so we one might conclude that PYPL is trading at a discount comparatively.

It is also worth noting that PYPL currently has a PEG ratio of 2.26. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Software was holding an average PEG ratio of 5.72 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 173, which puts it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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