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

Zacks Equity Research
·3-min read

Paypal (PYPL) closed at $156.78 in the latest trading session, marking a -0.45% move from the prior day. This change lagged the S&P 500's 1.37% gain on the day. Meanwhile, the Dow gained 2.05%, and the Nasdaq, a tech-heavy index, added 0.78%.

Investors will be hoping for strength from PYPL as it approaches its next earnings release. In that report, analysts expect PYPL to post earnings of $0.86 per share. This would mark no growth from the year-ago period. Meanwhile, our latest consensus estimate is calling for revenue of $4.91 billion, up 14.12% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.32 per share and revenue of $20.05 billion, which would represent changes of +7.1% and +12.8%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for PYPL. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 4.85% lower. PYPL is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, PYPL currently has a Forward P/E ratio of 47.44. This valuation marks a discount compared to its industry's average Forward P/E of 57.14.

Meanwhile, PYPL's PEG ratio is currently 3.18. 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 3.38 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 27, putting it in the top 11% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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