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Paypal (PYPL) Gains But Lags Market: What You Should Know

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Paypal (PYPL - Free Report) closed the most recent trading day at $116.05, moving +1.22% from the previous trading session. This change lagged the S&P 500's 1.43% gain on the day. At the same time, the Dow added 1.02%, and the tech-heavy Nasdaq gained 0.32%.

Heading into today, shares of the technology platform and digital payments company had gained 13.83% over the past month, outpacing the Computer and Technology sector's gain of 5.48% and the S&P 500's gain of 5.65% in that time.

Investors will be hoping for strength from Paypal as it approaches its next earnings release. The company is expected to report EPS of $0.88, down 27.87% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.41 billion, up 6.33% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.66 per share and revenue of $29.37 billion. These totals would mark changes of +1.3% and +15.75%, respectively, from last year.

Any recent changes to analyst estimates for Paypal should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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 0.06% higher within the past month. Paypal currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, Paypal is holding a Forward P/E ratio of 24.58. For comparison, its industry has an average Forward P/E of 47.87, which means Paypal is trading at a discount to the group.

Also, we should mention that PYPL has a PEG ratio of 1.28. 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. PYPL's industry had an average PEG ratio of 2.98 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 200, putting it in the bottom 22% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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