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

Zacks Equity Research
·3 min read

Paypal (PYPL) closed at $201.96 in the latest trading session, marking a +0.95% move from the prior day. This move outpaced the S&P 500's daily gain of 0.47%. Elsewhere, the Dow gained 0.4%, while the tech-heavy Nasdaq added 0.33%.

Coming into today, shares of the technology platform and digital payments company had gained 9.2% in the past month. In that same time, the Computer and Technology sector gained 6.61%, while the S&P 500 gained 3.42%.

PYPL will be looking to display strength as it nears its next earnings release, which is expected to be November 2, 2020. The company is expected to report EPS of $0.94, up 54.1% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.40 billion, up 23.36% from the year-ago period.

PYPL's full-year Zacks Consensus Estimates are calling for earnings of $3.74 per share and revenue of $21.36 billion. These results would represent year-over-year changes of +20.65% and +20.21%, respectively.

Any recent changes to analyst estimates for PYPL should also be noted by investors. 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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 0.12% lower. PYPL is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that PYPL has a Forward P/E ratio of 53.48 right now. This valuation marks a discount compared to its industry's average Forward P/E of 87.57.

We can also see that PYPL currently has a PEG ratio of 2.52. 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 7.03 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 165, which puts it in the bottom 35% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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