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

Zacks Equity Research

Paypal (PYPL) closed at $104.59 in the latest trading session, marking a -0.39% move from the prior day. This change lagged the S&P 500's daily gain of 0.15%. At the same time, the Dow added 0.1%, and the tech-heavy Nasdaq gained 0.05%.

Prior to today's trading, shares of the technology platform and digital payments company had gained 4.34% over the past month. This has outpaced the Computer and Technology sector's gain of 1% and the S&P 500's gain of 1.32% in that time.

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 $0.83 per share. This would mark year-over-year growth of 20.29%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.94 billion, up 16.99% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.07 per share and revenue of $17.76 billion. These totals would mark changes of +26.86% and +14.92%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for PYPL. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection remained stagnant. PYPL currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that PYPL has a Forward P/E ratio of 34.16 right now. This valuation marks a discount compared to its industry's average Forward P/E of 59.5.

Investors should also note that PYPL has a PEG ratio of 1.86 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Software was holding an average PEG ratio of 2.82 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 98, putting it in the top 39% 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.

To follow PYPL in the coming trading sessions, be sure to utilize Zacks.com.


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