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

Zacks Equity Research
·3 min read

In the latest trading session, Paypal (PYPL) closed at $234.91, marking a +1.29% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.71%. Meanwhile, the Dow gained 0.56%, and the Nasdaq, a tech-heavy index, added 0.95%.

Coming into today, shares of the technology platform and digital payments company had gained 6.42% in the past month. In that same time, the Computer and Technology sector gained 0.85%, while the S&P 500 gained 0.17%.

Investors will be hoping for strength from PYPL as it approaches its next earnings release. The company is expected to report EPS of $1, up 16.28% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $6.06 billion, up 22.25% from the year-ago period.

Investors should also note any recent changes to analyst estimates for PYPL. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.35% higher. PYPL currently has a Zacks Rank of #3 (Hold).

Digging into valuation, PYPL currently has a Forward P/E ratio of 51.44. For comparison, its industry has an average Forward P/E of 83.05, which means PYPL is trading at a discount to the group.

Also, we should mention that PYPL has a PEG ratio of 2.46. 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. Internet - Software stocks are, on average, holding a PEG ratio of 4.15 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 192, putting it in the bottom 25% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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