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Paypal (PYPL) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Paypal (PYPL) closed at $72.46, marking a -1.71% move from the previous day. This change lagged the S&P 500's 0.38% loss on the day. At the same time, the Dow lost 0.5%, and the tech-heavy Nasdaq lost 0.46%.

Prior to today's trading, shares of the technology platform and digital payments company had lost 5.06% over the past month. This has was narrower than the Computer and Technology sector's loss of 8.38% and the S&P 500's loss of 6.69% in that time.

Wall Street will be looking for positivity from Paypal as it approaches its next earnings report date. In that report, analysts expect Paypal to post earnings of $0.87 per share. This would mark a year-over-year decline of 24.35%. Our most recent consensus estimate is calling for quarterly revenue of $6.82 billion, up 9.28% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.95 per share and revenue of $28.26 billion, which would represent changes of -14.13% and +11.4%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Paypal. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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. The Zacks Consensus EPS estimate has moved 2.07% lower within the past month. Paypal is currently a Zacks Rank #5 (Strong Sell).

Digging into valuation, Paypal currently has a Forward P/E ratio of 18.66. Its industry sports an average Forward P/E of 39.81, so we one might conclude that Paypal is trading at a discount comparatively.

Investors should also note that PYPL has a PEG ratio of 1.07 right now. 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. PYPL's industry had an average PEG ratio of 2.36 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 150, which puts it in the bottom 41% 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.

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

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