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

Zacks Equity Research

In the latest trading session, Paypal (PYPL) closed at $186.96, marking a +1.61% move from the previous day. This move outpaced the S&P 500's daily gain of 1.27%. Meanwhile, the Dow gained 1.18%, and the Nasdaq, a tech-heavy index, added 1.87%.

Coming into today, shares of the technology platform and digital payments company had lost 4.7% in the past month. In that same time, the Computer and Technology sector gained 1.37%, while the S&P 500 gained 0.37%.

PYPL will be looking to display strength as it nears its next earnings release. In that report, analysts expect PYPL to post earnings of $0.93 per share. This would mark year-over-year growth of 52.46%. Our most recent consensus estimate is calling for quarterly revenue of $5.39 billion, up 23.22% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.74 per share and revenue of $21.36 billion. These totals would mark changes of +20.65% and +20.18%, 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. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 1.54% higher within the past month. PYPL is currently a Zacks Rank #3 (Hold).

Looking at its valuation, PYPL is holding a Forward P/E ratio of 49.25. For comparison, its industry has an average Forward P/E of 81.49, which means PYPL is trading at a discount to the group.

We can also see that PYPL currently has a PEG ratio of 2.29. 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. PYPL's industry had an average PEG ratio of 4.84 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 173, putting it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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Zacks Investment Research