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3 Reasons Why PayPal (PYPL) Could Be Poised To Beat Earnings

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PayPal Holdings, Inc. (PYPL - Free Report) is a technology platform company that offers online payment solutions, which allows customers to pay and get paid, withdraw funds from bank accounts, and hold balances in their PayPal accounts in various currencies. Additionally, PayPal will be releasing its quarterly earnings report after the closing bell on Wednesday, July 26.

PayPal currently sports a Zacks Rank #2 (Buy) and has defeated its earnings projections in each of its past seven operational quarters, including a beat last quarter of 9.09%. Furthermore, PayPal operates in the Internet Software industry, which currently sits in the top 29% of the Zacks Industry Rank.

PayPal’s impressive Zacks Rank, consistency in beating earnings estimates, and Earnings ESP of 3.13% should instill a sense of optimism in investors as we approach the company’s earnings report date.

If that’s not enough, here are 3 additional reasons to favor PayPal before its earnings report is released:

1.       Expansion Through Partnerships And Innovation

PayPal continues to create strong partnerships like its current agreement with Visa, which enhances consumer choice, point of sale acceptance, instant money withdrawal facility, and data quality. This partnership provides certain economic benefits to the company, such as Visa incentives for increased volume and greater long-term Visa fee certainty. Further, the company possesses similar partnerships with Google (GOOGL), Facebook (FB), Mastercard, Pinterest, eBay (EBAY), and more.

The company also created One Touch, which is a platform that allows customers to make purchases through a variety of merchant websites or apps without having to enter additional information. The service is utilized by more than 5 million users and 53 million consumers. In essence, One Touch, along with the millennial favorite Venmo, have allowed PayPal to gain a clear advantage in the mobile and online payment markets.

2.       Strong Style Scores

PayPal holds an impressive “A” grade for Momentum in our Style Scores System. This grade was driven by a 55.06% increase in share price over the past year. In addition, PayPal holds a strong “B” grade for Growth. PayPal sports a current cash flow growth of 13.91% and net margin of 12.60%, both of which compare favorably to the industry averages of -19.38% and -17.45%. Also, PayPal holds a strong RoE of 10.09% in comparison to the industry average of -16.46%.

3.       Impressive Growth in Key Divisions

PayPal’s sales are projected to grow in various, yet vital divisions throughout the company. For example, our current consensus estimate calls for active customer accounts to increase from 188 million to 207 million, which would represent year-over-year growth of 10.3%. Also, our estimates project that payment transactions will witness year-over-year growth of 23.4%, with the total number of transactions jumping from 1.45 billion to around 1.78 billion. Finally, total payment volume is expected to grow from 86.21 billion to 105.6 billion, an increase of 22.5% year-over-year.

These consensus estimates are from our exclusive non-financial metrics estimate file. These estimates are updated daily and are based on the independent research of expert stock analysts. Learn more here>>>

According to the latest Zacks Consensus Estimates, PayPal is projected to report revenue of $3.10 billion, which would constitute impressive year-over-year growth of 16.81%. Also, the company is expected to post earnings of $0.32 per share, which would represent year-over-year growth of 8.33%.

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