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PayPal (PYPL - Free Report) currently carries an undesirable Zacks Rank #5 (Strong Sell). PYPL has emerged as one of the largest online payment solutions providers on the back of a strong product portfolio and two-sided platform that enables the company to offer a smooth and secure transaction process to both customers and merchants.
PayPal has been suffering from its weakening momentum in the international market, with COVID-19 uncertainties remaining a thorn in the company’s side. Additionally, the intensifying competition in the digital market poses a significant risk to PayPal’s current market position.
Furthermore, the company has revised its full-year guidance for both the top and bottom-line.
Share Performance
PayPal shares have suffered year-to-date, losing nearly 55% of their value and easily underperforming the S&P 500’s decline of almost 13%.
Image Source: Zacks Investment Research
Stretching out the time frame, we can see that the poor share performance hasn’t just been throughout 2022 but also over the last year. PYPL shares have lost 67% of their value in this time horizon and have vastly underperformed the S&P 500’s slight return of 0.5%.
Image Source: Zacks Investment Research
Quarterly Performance
Over its last four quarters, the company carries an average EPS surprise of a positive 4.7% and has beaten EPS estimates just twice in this timeframe.
Additionally, in its latest quarter, PayPal reported earnings that were in line with the Zacks Consensus Estimate.
Valuation
PayPal has a forward earnings multiple on the higher side at 31.1X and has a Style Score of D for Value.
Furthermore, the current value represents a rich 67% premium relative to the S&P 500’s forward P/E ratio of 18.6X. Although the value has come well off 2021 highs of 87.8X, it still appears pricey.
Image Source: Zacks Investment Research
Forecasted Growth
Over the last 60 days, analysts have been rapidly lowering their earnings outlook across the board with a 100% revision agreement percentage.
The Consensus Estimate Trend has fallen roughly 33% for the upcoming quarter, reflecting earnings of $0.55 per share and a concerning 37% decline in earnings from the year-ago quarter. Additionally, the current year’s EPS estimate currently sits at $2.74 per share – forecasting a nasty 27% decline in earnings year-over-year.
Image Source: Zacks Investment Research
Bottom Line
PayPal shares have been the victim of a deep valuation slash not just throughout 2022 but also over the past year as well. Additionally, the bottom-line is expected to shrink by a considerable percentage in FY22.
The high-flying days for this stock are well over for now, and investors should heed caution with this stock as it currently carries an unfavorable Zacks Rank #5 (Strong Sell).
Instead, investors should pivot to stocks carrying a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy).
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Bear of the Day: PayPal Holdings, Inc. (PYPL)
PayPal (PYPL - Free Report) currently carries an undesirable Zacks Rank #5 (Strong Sell). PYPL has emerged as one of the largest online payment solutions providers on the back of a strong product portfolio and two-sided platform that enables the company to offer a smooth and secure transaction process to both customers and merchants.
PayPal has been suffering from its weakening momentum in the international market, with COVID-19 uncertainties remaining a thorn in the company’s side. Additionally, the intensifying competition in the digital market poses a significant risk to PayPal’s current market position.
Furthermore, the company has revised its full-year guidance for both the top and bottom-line.
Share Performance
PayPal shares have suffered year-to-date, losing nearly 55% of their value and easily underperforming the S&P 500’s decline of almost 13%.
Image Source: Zacks Investment Research
Stretching out the time frame, we can see that the poor share performance hasn’t just been throughout 2022 but also over the last year. PYPL shares have lost 67% of their value in this time horizon and have vastly underperformed the S&P 500’s slight return of 0.5%.
Image Source: Zacks Investment Research
Quarterly Performance
Over its last four quarters, the company carries an average EPS surprise of a positive 4.7% and has beaten EPS estimates just twice in this timeframe.
Additionally, in its latest quarter, PayPal reported earnings that were in line with the Zacks Consensus Estimate.
Valuation
PayPal has a forward earnings multiple on the higher side at 31.1X and has a Style Score of D for Value.
Furthermore, the current value represents a rich 67% premium relative to the S&P 500’s forward P/E ratio of 18.6X. Although the value has come well off 2021 highs of 87.8X, it still appears pricey.
Image Source: Zacks Investment Research
Forecasted Growth
Over the last 60 days, analysts have been rapidly lowering their earnings outlook across the board with a 100% revision agreement percentage.
The Consensus Estimate Trend has fallen roughly 33% for the upcoming quarter, reflecting earnings of $0.55 per share and a concerning 37% decline in earnings from the year-ago quarter. Additionally, the current year’s EPS estimate currently sits at $2.74 per share – forecasting a nasty 27% decline in earnings year-over-year.
Image Source: Zacks Investment Research
Bottom Line
PayPal shares have been the victim of a deep valuation slash not just throughout 2022 but also over the past year as well. Additionally, the bottom-line is expected to shrink by a considerable percentage in FY22.
The high-flying days for this stock are well over for now, and investors should heed caution with this stock as it currently carries an unfavorable Zacks Rank #5 (Strong Sell).
Instead, investors should pivot to stocks carrying a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy).