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

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PayPal Holdings, Inc. (PYPL - Free Report) is scheduled to report first-quarter 2021 results on May 5.

The company expects first-quarter revenues to reflect a year-over-year improvement of 28% at the current spot rate and 26% on a FX-neutral basis.The Zacks Consensus Estimate for revenues is pegged at $5.9billion, indicating an improvement of 27.7% from the prior-year quarter’s reported figure.

The company anticipates non-GAAP earnings growth of 50% year over year for the quarter under review.The Zacks Consensus Estimate for earnings stands at $1.01 per share, suggesting growth of 53% from the year-ago reported figure.

Notably, the company surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once. It has a trailing four-quarter earnings surprise of 9.3%, on average.

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 to Note

PayPal’s robust product portfolio, including One Touch, Xoom and Venmo, is anticipated to get reflected in first-quarter results.

Further, strong merchant services are expected to have sustained momentum in the to-be-reported quarter.

Additionally, the company is expected to have gained from the growing proliferation of online payment transactions in the first quarter amid the pandemic.

Moreover, strengthening user engagements on PayPal’s platform, owing to shifting customer preference toward contactless payments amid the coronavirus pandemic, are expected tohave accelerated the company’s payment volume in the to-be-reported quarter.

Moreover, it is likely to have accelerated growth of the company’s net new active accounts in the quarter under review.

Additionally, solid momentum in P2P, courtesy of its innovative and advanced products and services, is expected to have driven the above-mentioned metrics. Also, rising in-store digital payments are expected to have benefited the company’s P2P payment volume in the quarter to be reported.

Key Metrics to Consider

Total payment volume (TPV), active customer accounts, payment transactions per active account and 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 392 million, up 20.6% from the year-ago quarter’s reported figure.

The consensus mark for payment transactions per active user is pegged at 42.03 million, suggesting growth of 6.7% from the year-ago quarter’s reported figure.

Further, the consensus estimate for the total number of payment transactions stands at 4.4 billion, indicating an improvement of 34% from the prior-year quarter’s reported figure.

Furthermore, the Zacks Consensus Estimate for TPV is pegged at $268.02 billion, suggesting growth of 40.6% on a year-over-year basis.

What Our Model Says

Our proven model conclusively 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PayPal has an Earnings ESP of +1.67% and a Zacks Rank #3.

Other Stocks to Consider

Here are some other stocks worth considering as our model shows that these too have the right combination of elements to beat on earnings this season.

Waters Corporation (WAT - Free Report) currently has an Earnings ESP of +2.94% and is Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

Booking Holdings Inc. (BKNG - Free Report) has an Earnings ESP of +28.46% and a Zacks Rank of 3 at present.

Square, Inc. (SQ - Free Report) presently has an Earnings ESP of +16.14% and a Zacks Rank #3.

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