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Paypal (PYPL) Outpaces Stock Market Gains: What You Should Know

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Paypal (PYPL - Free Report) closed the most recent trading day at $81.65, moving +0.74% from the previous trading session. This change outpaced the S&P 500's 0.13% gain on the day. At the same time, the Dow added 0.28%, and the tech-heavy Nasdaq lost 0.06%.

Prior to today's trading, shares of the technology platform and digital payments company had gained 4.34% over the past month. This has outpaced the Computer and Technology sector's loss of 13.84% and lagged the S&P 500's gain of 5.55% in that time.

Investors will be hoping for strength from Paypal as it approaches its next earnings release, which is expected to be August 2, 2022. On that day, Paypal is projected to report earnings of $0.86 per share, which would represent a year-over-year decline of 25.22%. Our most recent consensus estimate is calling for quarterly revenue of $6.79 billion, up 8.92% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.84 per share and revenue of $28.18 billion, which would represent changes of -16.52% and +11.06%, respectively, from the prior year.

Any recent changes to analyst estimates for Paypal should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Over the past month, the Zacks Consensus EPS estimate has moved 1.26% lower. Paypal currently has a Zacks Rank of #4 (Sell).

Digging into valuation, Paypal currently has a Forward P/E ratio of 21.12. For comparison, its industry has an average Forward P/E of 44.14, which means Paypal is trading at a discount to the group.

Investors should also note that PYPL has a PEG ratio of 1.2 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Software was holding an average PEG ratio of 2.54 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 136, putting it in the bottom 47% 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.

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


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