Shares of PayPal (PYPL - Free Report) surged over 2.50% to reach a new all-time high on Thursday, and now many investors might be wondering if they should get in on the digital payment company, despite it breaking through a brand new threshold.
People use cash less and less these days, especially in the developed world where mobile, online, and contactless payment options have become normal.
Fintech and mobile payments platforms are tangible, usable, and practical for the average person. This makes companies that operate in this sector potentially very valuable, both today and in the future.
PayPal is one of the original online and digital payment companies, and since spinning off from eBay (EBAY - Free Report) a few years ago, the firm has gone on quite the run and now boasts over 210 million active accounts.
The companysaw its stock price pop to hit $65.63 per share on Thursday, a new all-time intraday trading high. Let’s take a look at some of what the company has done recently, as well as some key fundamental metrics, to see if investors might want to invest in the digital payment firm.
PayPal owns mobile peer-to-peer payment giant Venmo, which is widely popular with millennials and has experienced massive year-over-year growth, and the company now partners with credit card giants Visa (V - Free Report) and Mastercard (MA - Free Report) —where previously they were at odds.
In August, Mastercard introduced a new PayPal Cashback credit card. On Thursday, PayPal and Mastercard announced that they expanded their partnership to include more services on a larger global scale in Canada, Europe, Latin America, the Caribbean, the Middle East, and Africa.
“Together we expect to accelerate digital payment adoption across the world, improve the payment experience online, in-app and in store, and empower millions of consumers to seamlessly manage and move their money,” PayPal Chief Commercial Officer Gary Marino said in a statement.
These new relationships have helped PayPal grow more quickly. On top of that, PayPal has struck deals with over 20 new partners,including Facebook (FB - Free Report) , Baidu (BIDU - Free Report) , and JPMorgan Chase (JPM - Free Report) , all within the last year and a half.
PayPal’s second quarter saw the company’s revenues pop 18% to hit $3.14 billion, while the company’s earnings jumped 27%. PayPal is currently a Zacks Rank #2 (Buy) with an overall VGM grade of “C.”
PayPal might not be the most attractive investment for value-minded investors, as it is currently trading at almost 35x earnings. This, however, does mark a massive discount to the industry, which is trading at 62x earnings—its younger competitor, Square (SQ - Free Report) , has a P/E ratio of 160.39.
The company’s P/B ratio of 5.15 is not great either, but again, it is comparable to the “Internet – Software” industry average.
The digital payment solution firm’s 13.91% cash flow growth helps demonstrates that the company is healthy compared to many of its peers that have more cash going out than coming in.
PayPal’s revenues are projected to gain 18.99% this quarter and gain 18.62% on the year to hit as high as $12.94 billion, based on our current consensus estimates. The “Internet – Software” industry is set to experience 9.73% year-over-year sales growth. PayPal’s quarterly earnings are expected to pop 24.60% this quarter and 22.45% for the year.
These substantial gains are projected even though, within the last 60 days, PayPal has received eight downward earnings estimate revisions against only one positive change. However, since spinning off in 2015, PayPal has beat quarterly expectations every time.
In a mobile-centered and digital world, fintech and online payment companies will be positioned to cash in on the future of transactions. PayPal is a pioneer in the industry and might just be a company investors consider now—and down the road.
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