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Paypal (PYPL) Up 4.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Paypal (PYPL - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PayPal Q4 Earnings Beat Estimates, Revenues Up Y/Y
PayPal Holdings reported non-GAAP earnings of $1.48 per share for fourth-quarter 2023, which beat the Zacks Consensus Estimate by 8.8%. The figure improved 19% on a year-over-year basis.
Net revenues of $8.03 billion exhibited year-over-year growth of 9% on an FX-neutral basis as well as on a reported basis. The figure surpassed the Zacks Consensus Estimate of $7.88 billion.
Growing transaction and other value-added services’ revenues drove top-line growth year over year in the reported quarter. Also, accelerating U.S. and international revenues contributed well.
Top Line in Detail
By Type: Transaction revenues amounted to $7.3 billion (91% of net revenues), up 9% from the year-ago quarter’s level. Other value-added services generated revenues of $743 million (accounting for 9% of net revenues), up 9% year over year.
By Geography: Revenues from the United States totaled $4.64 billion (58% of net revenues), up 8% on a year-over-year basis. International revenues were $3.4 billion (42% of net revenues), up 10% from the prior-year quarter’s level.
Key Metrics to Consider
PayPal witnessed a year-over-year decline of 2% in total active accounts, which came in at 426 million in the quarter under review. The figure came below the Zacks Consensus Estimate of 433 million.
The total number of payment transactions was 6.8 billion, up 13% on a year-over-year basis. The figure beat the consensus mark of 6.7 billion.
PYPL’s payment transactions per active account were 58.7 million, which improved 14% from the year-ago quarter’s level. The figure surpassed the consensus mark of 56 million.
Total payment volume amounted to $409.83 billion for the reported quarter, indicating year-over-year growth of 15% on a spot-rate basis and 13% on a currency-neutral basis. The reported figure topped the Zacks Consensus Estimate of $403.53 billion.
Operating Details
PayPal’s operating expenses were $6.3 billion in the fourth quarter, up 2.6% from the prior-year quarter’s figure. As a percentage of net revenues, the figure contracted 470 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 23.3%, expanding 39 bps from the year-ago quarter’s level.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash equivalents and investments were $14.1 billion, down from $15.4 billion as of Sep 30, 2023.
PayPal had a long-term debt balance of $9.7 billion as of Dec 31, 2023 compared with $10.6 billion as of Sep 30, 2023.
PYPL generated $2.6 billion in cash from operations during the reported quarter compared with $1.3 billion in the previous quarter. Free cash flow was $2.5 billion in the fourth quarter, up from $1.1 billion reported in the prior quarter.
The company returned $0.6 billion to its shareholders by repurchasing 10 million shares.
Guidance
For first-quarter 2024, PayPal expects revenues to grow 6.5% on a spot rate basis and 7% on a currency-neutral basis from the year-ago quarter.
Non-GAAP earnings are expected to be up by mid-single digits on a year-over-year basis.
For 2024, PayPal anticipates non-GAAP earnings to be in line with the reported figure in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -9.13% due to these changes.
VGM Scores
At this time, Paypal has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Paypal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Paypal belongs to the Zacks Internet - Software industry. Another stock from the same industry, F5 Networks (FFIV - Free Report) , has gained 4.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
F5 reported revenues of $692.6 million in the last reported quarter, representing a year-over-year change of -1.1%. EPS of $3.43 for the same period compares with $2.47 a year ago.
F5 is expected to post earnings of $2.87 per share for the current quarter, representing a year-over-year change of +13.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for F5. Also, the stock has a VGM Score of B.
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Paypal (PYPL) Up 4.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Paypal (PYPL - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PayPal Q4 Earnings Beat Estimates, Revenues Up Y/Y
PayPal Holdings reported non-GAAP earnings of $1.48 per share for fourth-quarter 2023, which beat the Zacks Consensus Estimate by 8.8%. The figure improved 19% on a year-over-year basis.
Net revenues of $8.03 billion exhibited year-over-year growth of 9% on an FX-neutral basis as well as on a reported basis. The figure surpassed the Zacks Consensus Estimate of $7.88 billion.
Growing transaction and other value-added services’ revenues drove top-line growth year over year in the reported quarter. Also, accelerating U.S. and international revenues contributed well.
Top Line in Detail
By Type: Transaction revenues amounted to $7.3 billion (91% of net revenues), up 9% from the year-ago quarter’s level. Other value-added services generated revenues of $743 million (accounting for 9% of net revenues), up 9% year over year.
By Geography: Revenues from the United States totaled $4.64 billion (58% of net revenues), up 8% on a year-over-year basis. International revenues were $3.4 billion (42% of net revenues), up 10% from the prior-year quarter’s level.
Key Metrics to Consider
PayPal witnessed a year-over-year decline of 2% in total active accounts, which came in at 426 million in the quarter under review. The figure came below the Zacks Consensus Estimate of 433 million.
The total number of payment transactions was 6.8 billion, up 13% on a year-over-year basis. The figure beat the consensus mark of 6.7 billion.
PYPL’s payment transactions per active account were 58.7 million, which improved 14% from the year-ago quarter’s level. The figure surpassed the consensus mark of 56 million.
Total payment volume amounted to $409.83 billion for the reported quarter, indicating year-over-year growth of 15% on a spot-rate basis and 13% on a currency-neutral basis. The reported figure topped the Zacks Consensus Estimate of $403.53 billion.
Operating Details
PayPal’s operating expenses were $6.3 billion in the fourth quarter, up 2.6% from the prior-year quarter’s figure. As a percentage of net revenues, the figure contracted 470 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 23.3%, expanding 39 bps from the year-ago quarter’s level.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash equivalents and investments were $14.1 billion, down from $15.4 billion as of Sep 30, 2023.
PayPal had a long-term debt balance of $9.7 billion as of Dec 31, 2023 compared with $10.6 billion as of Sep 30, 2023.
PYPL generated $2.6 billion in cash from operations during the reported quarter compared with $1.3 billion in the previous quarter. Free cash flow was $2.5 billion in the fourth quarter, up from $1.1 billion reported in the prior quarter.
The company returned $0.6 billion to its shareholders by repurchasing 10 million shares.
Guidance
For first-quarter 2024, PayPal expects revenues to grow 6.5% on a spot rate basis and 7% on a currency-neutral basis from the year-ago quarter.
Non-GAAP earnings are expected to be up by mid-single digits on a year-over-year basis.
For 2024, PayPal anticipates non-GAAP earnings to be in line with the reported figure in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -9.13% due to these changes.
VGM Scores
At this time, Paypal has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Paypal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Paypal belongs to the Zacks Internet - Software industry. Another stock from the same industry, F5 Networks (FFIV - Free Report) , has gained 4.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
F5 reported revenues of $692.6 million in the last reported quarter, representing a year-over-year change of -1.1%. EPS of $3.43 for the same period compares with $2.47 a year ago.
F5 is expected to post earnings of $2.87 per share for the current quarter, representing a year-over-year change of +13.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for F5. Also, the stock has a VGM Score of B.