Back to top

Image: Bigstock

How to Invest in PayPal's Strong Q1 Results Via ETFs

Read MoreHide Full Article

Digital payment company PayPal (PYPL - Free Report) came up with first-quarter 2017 financial results on April 26, after the bell.  The company reported adjusted earnings of $0.36 per share (including stock-based compensation expense), surpassing the Zacks Consensus Estimate of $0.33.

The company reported revenues of $2.975 billion, which came ahead of the Zacks Consensus Estimate of $2.934 billion and increased 17% year over year (or 19% on a currency-neutral basis).

Guidance Raised

PayPal has also beefed up its 2017 guidance and expects revenues to grow 15–17% on a currency-neutral basis to $12.520–$12.720 billion. Non-GAAP earnings per diluted share are estimated in the range of $1.74–$1.79. The previous guidance called for a profit of $1.74 a share, on revenues of $12.65 billion, as per Bloomberg.

GAAP earnings per diluted share for 2017 are estimated in the range of $1.28–$1.33. Earnings for Q2 are guided in the range of $0.41–$0.43 on revenues of $3.05 billion to $3.1 billion. Analysts estimated earnings of $0.42 per share on sales of $3.07 billion, as per Bloomberg.

The company also announced a $5 billion of stock buyback. Partnerships with Alphabet’s Google, several major retailers and financial institutions like Visa and Mastercard seem to be paying off (read: Buy These ETFs on Reduced Physical Banking).

Market Impact

The overall beat and an optimistic guidance boosted PYPL stock by about 6.2% in the key trading session on April 27. The stock also gained about 0.3% after hours. While investing in the PayPal stock is definitely an option to play the potential boom, an ETF route also offers investors a less risky and diversified approach.We have detailed below five such ETFs that have considerable exposure to PayPal:

Guggenheim Spin-Off ETF (CSD - Free Report)

This ETF offers targeted exposure to U.S. companies that were spun off within the last four years. The fund has amassed $203 million in its asset base. Expense ratio comes in at 0.65%. From a sector look, Information Technology takes the top position. In-focus PayPal occupies about 7.93% share of the fund. CSD added over 0.4% on April 27.

Purefunds ISE Mobile Payments ETF (IPAY - Free Report)

This ETF tracks the ISE Mobile Payments Index to provide exposure to the performance of companies engaged in the mobile/electronic payments business. This approach results in the fund holding a basket of 31 stocks. PayPal gets 5.96% weight of the fund. It charges 75 bps in fees and has amassed about $95 million in assets. IPAY was up about 0.1% on April 27.

FinTech Thematic ETF (FINX - Free Report)

This $2.5-million fund also looks to track companies belonging to the emerging financial technology sector. PayPal Holdings gets 5.53% exposure of the fund. The 29-stock fund puts about 43% weight in the data processing & outsourced services while application software (35.2%) and Internet software & services (6.5%) round out the next two spots. FINX was up about 1.2% on April 27 (read: Forget IBM, Buy These Thematic Tech ETFs Instead).

First Trust US Equity Opportunities ETF (FPX - Free Report)

This ETF targets the U.S. IPO market and follows the IPOX-100 U.S. Index. It has accumulated $735.4 million in its asset base and charges 60 bps in fees a year. In total, the fund holds 101 securities in its basket with 5.08% share going to PayPal Holdings. FPX was up over 0.4% on April 27.

First Trust Dow Jones Internet Index (FDN - Free Report)

This Internet fund charges 54 bps in fees per year. In total, the fund holds 42 stocks in its basket with the in-focus PayPal Holdings taking the seventh spot with 4.64% share. This $4.2-billion fund was up over 0.8% on April 27, 2017 (read: eBay Slumps Despite Q1 Beat: Buy the Dip via ETFs?).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Published in