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PayPal (PYPL) to Report Q2 Earnings: What's in the Cards?

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PayPal Holdings, Inc. (PYPL - Free Report) is scheduled to report second-quarter 2021 results on Jul 28.

The company projects second-quarter revenues at $6.25 billion, reflecting a year-over-year improvement of 19% at the current spot rate and 17% on a FX-neutral basis.The Zacks Consensus Estimate for revenues is pegged at $6.32 billion, indicating an improvement of 20.1% from the prior-year quarter’s reported figure.

PayPal expects non-GAAP earnings of $1.12 per share, suggesting growth of 5%. The Zacks Consensus Estimate for earnings stands at $1.13 per share, suggesting growth of 5.6% from the year-ago reported figure.

Notably, the company surpassed the Zacks Consensus Estimate in all of the trailing four quarters, delivering an earnings surprise of 17.5%, 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

Key Factors to Note

Impacts of PayPal’s robust product portfolio, including One Touch and Venmo, are anticipated to get reflected in the second-quarter results.

Strong monetization efforts of Venmo are likely to have aided its adoption rate in the to-be-reported quarter.

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

It is likely to have accelerated growth of the company’s net new active accounts in the second quarter.

Solid momentum in P2P, courtesy of its innovative and advanced products and services, is anticipated to have driven the above-mentioned metrics.

Increasing e-commerce spending during the pandemic is anticipated to have bolstered the company’s payment transactions and payment volume in the second quarter.

PayPal is likely to have benefited from improving risk-management capabilities in the 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 second-quarter 2021, the Zacks Consensus Estimate for active customer accounts is pegged at 404 million, suggesting a 16.8% rise from the year-ago quarter’s reported figure.

The consensus mark for payment transactions per active user is pegged at 43.2 million, suggesting growth of 10.2% from the year-ago quarter’s reported number.

The consensus estimate for the total number of payment transactions stands at 4.7 billion, indicating an improvement of 25.1% from the prior-year quarter.

The Zacks Consensus Estimate for TPV is pegged at $296.01 billion, suggesting year-over-year growth of 33.5%.

What Our Model Says

Our proven model does not conclusively predict 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. But that’s not the case here. 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 -0.19% and a Zacks Rank #2.

Stocks to Consider

Here are some stocks you may consider, as our proven model shows that thesehave the right combination of elements to post a beat this earnings season.

Garmin Ltd. (GRMN - Free Report) has an Earnings ESP of +4.54% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carrier Global Corporation (CARR - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank of 2, currently.

Waters Corporation (WAT - Free Report) has an Earnings ESP of +2.71% and a Zacks Rank of 3 at present.