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PayPal (PYPL) to Post Q1 Earnings: What's in the Offing?

PayPal Holdings, Inc. PYPL is scheduled to report first-quarter 2023 results on May 8.

The company projects year-over-year revenues growth of 7.5% on a spot rate basis and 9% on a currency-neutral basis. The Zacks Consensus Estimate for revenues is pegged at $6.98 billion, indicating an improvement of 7.7% from the prior-year quarter’s reported figure.

Non-GAAP earnings are expected to be $1.08-$1.10 per share, suggesting growth of 23-25% on a year-over-year basis. The Zacks Consensus Estimate for earnings is pegged at $1.09 per share, suggesting an increase of 23.9% from the year-ago reported figure. Further, the figure has moved 0.9% upward over the past 30 days.

Notably, the company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while matching the same once, delivering an earnings surprise of 6.6%, on average.

PayPal Holdings, Inc. Price and EPS Surprise

 

PayPal Holdings, Inc. Price and EPS Surprise
PayPal Holdings, Inc. Price and EPS Surprise

PayPal Holdings, Inc. price-eps-surprise | PayPal Holdings, Inc. Quote

 

Factors at Play

PayPal’s persistent efforts toward strengthening the product portfolio are likely to have aided the company in gaining traction among customers in the first quarter.

The company’s upcoming results are likely to have benefited from Venmo’s product line strength, which is expected to have continued to aid customer engagement on PayPal’s platform. This is expected to have boosted growth in total active accounts in the quarter under review.

Venmo’s strong monetization efforts are likely to have aided its adoption rate in the to-be-reported quarter.

Robust PayPal Checkout experiences are expected to have sustained the company’s momentum in the quarter under review.

PayPal is expected to have gained from the growing proliferation of buy now pay later (BNPL) solution on the back of its strong offerings.

Further, strengthening offerings for small businesses is likely to have boosted growth in the company’s payments volume in the yet-to-be-reported quarter.

Key Metrics to Consider

Total payment volume (TPV), active customer accounts, payment transactions per active account and the total number of payment transactions are considered to be the key metrics for analyzing PayPal’s business growth.

For the first quarter, the Zacks Consensus Estimate for active customer accounts is pegged at 438 million, up 2.1% from the year-ago quarter’s reported figure.

The consensus mark for payment transactions per active user is pegged at 52 million, suggesting growth of 10.6% from the year-ago quarter’s reported number.

The consensus estimate for the total number of payment transactions is pinned at 5.8 billion, indicating an improvement of 12.6% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for TPV is pegged at $348.26 billion, suggesting growth of 7.8% on a year-over-year basis.

What Our Model Says

Our proven model predicts an earnings beat for PayPal this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

PayPal has a Zacks Rank #3 and an Earnings ESP of +2.77%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks that you may consider, as our model shows that they have the right combination of elements to beat on earnings this season.

DigitalOcean DOCN has an Earnings ESP of +3.45% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DOCN is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting a jump from 7 cents per share reported in the prior-year quarter.

Agilent Technologies A has an Earnings ESP of +0.40% and a Zacks Rank #2 at present.

Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, suggesting an increase of 12.4% from the prior-year quarter’s reported figure.

Cisco Systems CSCO has an Earnings ESP of +1.59% and a Zacks Rank #3 at present.

CSCO is scheduled to report third-quarter fiscal 2023 results on May 17. The Zacks Consensus Estimate for CSCO’s earnings is pegged at 97 cents per share, suggesting an increase of 11.5% from the prior-year quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

Agilent Technologies, Inc. (A) : Free Stock Analysis Report

PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report

DigitalOcean Holdings, Inc. (DOCN) : Free Stock Analysis Report

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