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An Early Preview of PayPal's (PYPL) Q1 Earnings Outlook

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Shares of PayPal (PYPL - Free Report) climbed on Thursday as investors continued to price in the possibility that the fintech power becomes a more full-service banking provider. With that said, amid current market volatility, investors should perhaps be more focused on PayPal’s upcoming first quarter financial results. 

PayPal, which currently boasts 227 million active customer accounts around the world, has slowly started to offer some customers the option to add traditional banking services, including debit cards, FDIC insurance, and direct deposit. The company’s ability to add these types of offerings will become hugely important going forward in order to compete against Square (SQ - Free Report) , Visa (V - Free Report) , JPMorgan Chase (JPM - Free Report) , and maybe even Amazon (AMZN - Free Report) .

However, while stocks continue to sink in the near-term, long-term gains might be far from some investors’ minds. Therefore, the aim is to take a look at what investors might expect from PayPal’s Q1 earnings release in order to avoid any further turmoil that a slow first quarter could bring.  

Outlook & Valuation

Our current Zacks Consensus Estimates are calling for PayPal’s Q1 revenues to climb by 20.3% to hit $3.58 billion. PayPal’s bottom line is projected to climb by a similar 22.7% to reach $0.54 per share. The digital payment company also earned one upward earnings estimate revisions within the last 30 days.

Heading into its soon-to-be-reported quarter, PayPal is trading with a P/E of 33.5, which marks a massive discount compared to the “Internet – Software” industry’s average of 59.5. This means PayPal is currently offering investors solid value while presenting strong top and bottom line growth.

Price Performance and Surprise History

Another important factor that investors might want to consider ahead of PayPal’s Q1 earnings report is the company’s history of earnings surprises and the effect that these surprises have had on share prices.

PayPal Holdings, Inc. Price, Consensus and EPS Surprise

PayPal Holdings, Inc. Price, Consensus and EPS Surprise | PayPal Holdings, Inc. Quote

We can see that PayPal boasts a very strong earnings surprise history, yet its bottom-line results have not always immediately translated into positive momentum for the stock. Furthermore, investors should note that PayPal’s stock sunk immediately following the release of its fourth quarter earnings results, despite posting an earnings surprise of 5.8%.  

With that said, past performance does not necessarily indicate future success or failure. PayPal is expected to report its first quarter financial results on April 25.

Make sure to check back for more closer to PayPal’s Q1 earnings report!

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