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Paypal (PYPL) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Paypal (PYPL - Free Report) closed at $188.75, marking a -1% move from the previous day. This change lagged the S&P 500's 0.87% loss on the day. At the same time, the Dow lost 0.08%, and the tech-heavy Nasdaq lost 0.43%.

Heading into today, shares of the technology platform and digital payments company had lost 7.57% over the past month, lagging the Computer and Technology sector's loss of 1.23% and the S&P 500's gain of 0.7% in that time.

Wall Street will be looking for positivity from Paypal as it approaches its next earnings report date. On that day, Paypal is projected to report earnings of $1.12 per share, which would represent year-over-year growth of 3.7%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.89 billion, up 12.68% from the year-ago period.

PYPL's full-year Zacks Consensus Estimates are calling for earnings of $4.62 per share and revenue of $25.35 billion. These results would represent year-over-year changes of +19.07% and +18.14%, respectively.

Investors might also notice recent changes to analyst estimates for Paypal. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.52% higher within the past month. Paypal is currently a Zacks Rank #3 (Hold).

In terms of valuation, Paypal is currently trading at a Forward P/E ratio of 41.28. Its industry sports an average Forward P/E of 61.85, so we one might conclude that Paypal is trading at a discount comparatively.

It is also worth noting that PYPL currently has a PEG ratio of 2.1. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 3.73 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 189, which puts it in the bottom 26% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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