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

Zacks Equity Research

Paypal (PYPL) closed at $107.66 in the latest trading session, marking a +1.53% move from the prior day. This move outpaced the S&P 500's daily gain of 1.1%. Elsewhere, the Dow gained 1.05%, while the tech-heavy Nasdaq added 1.32%.

Prior to today's trading, shares of the technology platform and digital payments company had lost 7.89% over the past month. This has lagged the Computer and Technology sector's loss of 5.47% and the S&P 500's loss of 5.05% in that time.

Investors will be hoping for strength from PYPL as it approaches its next earnings release. The company is expected to report EPS of $0.70, up 20.69% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.34 billion, up 17.91% from the year-ago period.

PYPL's full-year Zacks Consensus Estimates are calling for earnings of $3.12 per share and revenue of $17.73 billion. These results would represent year-over-year changes of +28.93% and +14.72%, respectively.

It is also important to note the recent changes to analyst estimates for PYPL. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Within the past 30 days, our consensus EPS projection has moved 5.87% higher. PYPL is currently a Zacks Rank #2 (Buy).

Valuation is also important, so investors should note that PYPL has a Forward P/E ratio of 34.03 right now. This valuation marks a discount compared to its industry's average Forward P/E of 50.02.

Investors should also note that PYPL has a PEG ratio of 1.89 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PYPL's industry had an average PEG ratio of 2.92 as of yesterday's close.

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 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.

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


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