PayPal (PYPL) to Report Q4 Earnings: What's in the Cards?

PayPal Holdings, Inc. PYPL is scheduled to report fourth-quarter 2021 results on Feb 1.

The company projects fourth-quarter revenues between $6.85 billion and $6.95 billion, with growth of 12-14% (at a current spot rate) from the year-ago reported figure. The Zacks Consensus Estimate for revenues is pegged at $6.9 billion, indicating an improvement of 12.4% from the prior-year quarter’s reported figure.

PayPal expects non-GAAP earnings of $1.12 per share, reflecting 4% year-over-year growth. The Zacks Consensus Estimate for earnings also stands at $1.12 per share, which has been unchanged over the past 30 days.

Notably, the company surpassed the Zacks Consensus Estimate in all of the trailing four quarters, delivering an earnings surprise of 8.58%, on average.

PayPal Holdings, Inc. Price and EPS Surprise

PayPal Holdings, Inc. Price and EPS Surprise

PayPal Holdings, Inc. price-eps-surprise | PayPal Holdings, Inc. Quote

Key Factors to Note

The impacts of PayPal’s robust product portfolio, including One Touch and Venmo, are anticipated to get reflected in the fourth-quarter results.

Strong monetization efforts of Venmo are likely to have aided its adoption rate in the to-be-reported quarter.

Strengthening user engagements on the company’s platform, owing to shifting customer preference toward contactless payments amid the coronavirus pandemic, are expected to have accelerated its payment volume in the to-be-reported quarter.

It is likely to have accelerated growth of the company’s net new active accounts in the quarter under review.

Further, solid momentum in P2P, courtesy of its innovative and advanced products and services, is anticipated to have driven the above-mentioned metric.

The increasing number of cryptocurrency transactions on the company’s platform on the back of its strengthening services is expected to have contributed well to the quarterly performance.

Key Metrics to Consider

Total payment volume (TPV), active customer accounts, payment transactions per active account and the total number of payment transactions are considered the key metrics for analyzing PayPal’s business growth.

For fourth-quarter 2021, the Zacks Consensus Estimate for active customer accounts is pegged at 425 million, suggesting a 12.7% rise from the year-ago quarter’s reported figure.

The consensus mark for payment transactions per active user is pegged at 45.9 million, suggesting growth of 12.2% from the year-ago quarter’s reported number.

The consensus estimate for the total number of payment transactions stands at 5.4 billion, indicating an improvement of 22.3% from the prior-year quarter.

The Zacks Consensus Estimate for TPV is pegged at $344.42 billion, suggesting year-over-year growth of 24.3%.

Concerns

Uncertainties related to the ongoing coronavirus pandemic are anticipated to have continued to be major concerns for the company in the fourth quarter.

Further, the impacts of PayPal’s mounting expenses, and intensifying competition in the online payment and cryptocurrency markets are expected to get reflected in its upcoming results.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for PayPal this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PayPal has an Earnings ESP of -1.85% and a Zacks Rank #4.

Stocks to Consider

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post a beat this earnings season.

Endava DAVA has an Earnings ESP of +0.85% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Endava is scheduled to release second-quarter fiscal 2022 results on Feb 16. The Zacks Consensus Estimate for DAVA’s earnings is pegged at 59 cents per share, suggesting an increase of 55.26% from the prior-year reported figure.

Monolithic Power Systems MPWR has an Earnings ESP of +2.83% and a Zacks Rank #2 at present.

Monolithic Power Systems is set to report fourth-quarter 2021 results on Feb 10. The Zacks Consensus Estimate for MPWR’s earnings is pegged at $1.87 per share, which suggests an increase of 42.75% from the prior-year reported figure.

AMETEK AME has an Earnings ESP of +0.38% and a Zacks Rank #2 at present.

AMETEK is scheduled to release fourth-quarter 2021 results on Feb 3. The Zacks Consensus Estimate for AME’s earnings is pegged at $1.31 per share, which suggests an increase of 21.3% from the prior-year reported figure.

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