Latest news with #PYPL
Yahoo
20 hours ago
- Business
- Yahoo
Why PayPal Stock Is a Screaming Buy for the Second Half of 2025
PayPal stock (PYPL) has had a bumpy ride since 2020. The stock more than doubled in 2020 and continued its good run in the first half of 2021. However, PYPL ended that year in the red, meeting the same fate for the next two years. 2024 was a welcome break for PayPal investors as the 'law of averages' finally caught up with the stock, and it gained a respectable 39%, outperforming the S&P 500 Index ($SPX) after three consecutive years of underperformance. Cut to 2025, and PYPL stock has already lost nearly 20% and is yet again massively underperforming the broader market, which has recovered from its April lows. I see the recent fall in PayPal stock as a good buying opportunity, as we'll explore in this article. Dear Tesla Stock Fans, Mark Your Calendars for June 30 The 'Golden Era' for Tesla Starts June 22. Should You Buy TSLA Stock First? This Options Tool Can Show You How to Trade Tesla Stock Ahead of Robotaxi Day Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. PayPal started the year on a strong note but fell sharply after its Q4 2024 earnings. While the company posted better-than-expected revenues and profits for the quarter, and its guidance came in ahead of estimates, slowing growth at Braintree, its subsidiary focused on card processing, dampened sentiment. The tariff chaos did not help, as fintech companies, including Affirm (AFRM) and PayPal, slumped in April amid concerns that tariffs could lead to a recession, hurting their business. Both these stocks have not yet recovered to their 2025 highs, even as tariff worries have greatly (if not fully) subsided. While these are short-term headwinds, PayPal is facing some structural challenges in the form of higher competition across nearly all its business verticals. For instance, its branded checkout is facing intense competition from Apple Pay (AAPL) and Google Pay (GOOG), while the non-branded business faces competition from companies like Stripe. The P2P business is also facing competition from Zelle and Cash App (XYZ). The competition has negatively impacted PayPal's topline, which is now growing in single digits. With rising competition, digital payment companies have been feeling pressure on their take rate (the fees they charge for processing the transaction), and PayPal's operating margins have fallen. While I find corporate turnarounds a cliché, PayPal is a legit turnaround story under the new CEO, Alex Chriss, who is working on profitable growth. The strategy has shown results, and the company has had five consecutive quarters of profitable growth. PayPal has also made a foray into digital advertising, capitalizing on the vast consumer data that it possesses. The company is also using artificial intelligence to personalize experiences for customers. PayPal is transforming into a 'commerce company' from a mere payment company, and aspires to be a bridge connecting its over 400 million users to the merchants on the platform. During the Investor Day earlier this year, Chriss said that the pivot could help PayPal deliver annual adjusted earnings per share (EPS) growth of over 20% in the future. The investing thesis for PayPal is three part. The first is the turnaround and transformation, which is a work in progress The initial stages of this turnaround have been promising. The second is, of course, valuation, as PayPal's current forward price-earnings (P/E) multiple of 13.5x is well below the S&P 500 Index. Also, despite the slowdown, the company's bottom line is still growing, and the P/E-to-growth multiple of 1.13x looks quite attractive. Finally, PayPal is a free cash flow powerhouse despite all the challenges, and expects to generate between $6 billion-$7 billion of free cash in 2025. The company has been using the bulk of this cash flow to repurchase its shares and intends to spend $6 billion on buybacks this year. Given PayPal's current market cap of just over $66 billion, the buybacks will theoretically help boost its EPS by high single digits. PayPal's cash engine is not expected to slow down anytime soon, and it intends to use between 70%-80% of its free cash flows toward repurchases over the medium term, which should help propel its EPS growth in low-teens, if not higher. The company's balance sheet is also quite formidable, and it holds more cash and investments than the debt it owes. Overall, I find PayPal stock a no-brainer at these levels and am adding to my existing position in the company. While it is no longer the kind of growth story it was a few years back, there is a lot of comfort in these valuations, and the turnaround can help lead to a re-rating. Sell-side analysts also see decent upside in PYPL stock, and its mean target price of $80.50 is 17.4% higher than the June 18 closing price. The overall Street sentiment is mixed, though, and of the 44 analysts covering the stock, 16 have a 'Strong Buy' rating while three rate PYPL as a 'Moderate Buy.' 21 analysts rate PayPal as a 'Hold' while the remaining four rate it as a 'Strong Sell.' On the date of publication, Mohit Oberoi had a position in: PYPL, AFRM, GOOG, AAPL. All information and data in this article is solely for informational purposes. This article was originally published on
Yahoo
a day ago
- Business
- Yahoo
Should PayPal be on my list of shares to buy?
On the face of it, PayPal (NASDAQ:PYPL) ought to be on my list of shares to buy. The company has a market value of $69bn and has generated just under $6bn in free cash in the last year. With minimal debt, that implies a free cash flow yield of almost 9%. That's pretty high considering the business isn't in decline – but there's a catch when it comes to the valuation. With no dividend, PayPal returns cash to shareholders via share buybacks. These work by reducing the outstanding share count, increasing the value of each of the remaining shares. Since 2020, PayPal's returned over $20bn via share repurchases. That's around 30% of its current market value and the returns have been going up. Year Share Buybacks 2024 $6bn 2023 $5bn 2022 $4.2bn 2021 $3.4bn 2020 $1.6bn Despite this, the company's share count has only fallen by about 13% over the last five years. That's much less impressive and it raises an important question for investors. PayPal's share count isn't really going down much despite the firm using almost all the free cash it generates to buy back shares. So where's the money going? A big part of the answer is stock-based compensation. This is where PayPal issues shares to pay its staff part of their salaries in the firm's stock, rather than cash. A lot of companies do this and I don't think there's anything intrinsically wrong with it. But it's something that investors need to factor into their calculations. Since 2020, PayPal's issued around $6.5bn in stock to cover these expenses. And this has gone some way towards offsetting the cash the firm's been using for share buybacks. In 2024, the company spent almost $6bn on repurchasing shares, but just over 20% of this was offset by stock-based compensation. So the outstanding share count only fell by around 6%. Stock-based compensation doesn't involve cash leaving the business directly. As a result, some investors tend to think it isn't a real expense. I however, think this is a mistake. Issuing equity automatically reduces the value of share buybacks and this is a key mechanism companies can return cash to shareholders. This is especially true when it comes to PayPal. Its 9% free cash flow yield's attractive at first sight, but the firm can't just use this to bring down its share count by that amount every year. Before it can start bringing down its number of shares outstanding, it has to buy back the ones it issued. And it has to do that with cash, making it a very real expense for investors. I don't think PayPal's stock-based compensation is a reason to dismiss the stock out of hand immediately. And the company's undergoing an interesting shift in terms of its priorities. Focusing on margins over revenue growth could boost profits and integrating further into the online transaction process could boost its competitive position. These are potential positives. For the time being though, I think there are better opportunities available. While the stock looks like a bargain at first sight, I don't think it's as attractive for me as it seems. The post Should PayPal be on my list of shares to buy? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended PayPal. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Forbes
4 days ago
- Business
- Forbes
Buy PayPal Stock At $70?
CANADA - 2025/02/12: In this photo illustration, the PayPal logo is seen displayed on a smartphone ... More screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images) PayPal (NASDAQ:PYPL) shares have underperformed this year, falling approximately 17% year-to-date, in contrast to the S&P 500, which has risen around 2% during the same timeframe. PayPal's financial results have been varied. In Q1 2025, the firm reported earnings of $1.33 per share, surpassing expectations, although revenue fell short, totaling $7.8 billion—an increase of only 1% year-over-year—due to the company's focus on profitability over volume, leading to a reduction in its lower-margin revenue streams. The U.S. trade conflict has affected PayPal by creating economic uncertainty that may curb consumer spending and adversely impact cross-border e-commerce and payment volumes, which are essential for PayPal's income. Additionally, competition has been intensifying with platforms such as Apple Pay and Shopify making inroads into online checkout, which challenges PayPal's market leadership. Nonetheless, PayPal stock appears quite appealing at its current market price of approximately $71. We reach this assessment by evaluating the present valuation of PYPL shares alongside its operational performance in recent years and its current as well as historical financial health. Our evaluation of PayPal based on critical metrics of Growth, Profitability, Financial Stability, and Downturn Resilience indicates that the firm possesses a strong operational performance and financial standing, as outlined below. However, if you are looking for potential gains with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative option - it has outperformed the S&P 500 and yielded returns surpassing 91% since its launch. Based on what one pays per dollar of sales or profit, PYPL stock appears slightly undervalued relative to the broader market. • PayPal boasts a price-to-sales (P/S) ratio of 2.3 compared to a figure of 3.0 for the S&P 500 • Furthermore, the company's price-to-free cash flow (P/FCF) ratio stands at 9.9, while the S&P 500 registers at 20.5 • Additionally, it has a price-to-earnings (P/E) ratio of 17.8 as opposed to the benchmark's 26.4 PayPal's Revenues have experienced some growth in recent years. • PayPal's top line has grown at an average rate of 7.8% over the past 3 years (versus a 5.5% increase for the S&P 500) • Its revenues have increased by 6.8% from $30 billion to $32 billion in the last 12 months (in comparison to 5.5% growth for the S&P 500) • Additionally, its quarterly revenues grew by 4.2% to $7.8 billion in the latest quarter from $7.7 billion a year earlier (compared to a 4.8% increase for the S&P 500) PayPal's profit margins are approximately at the median level for firms in the Trefis coverage universe. • PayPal's Operating Income during the previous four quarters was $5.8 billion, representing a moderate Operating Margin of 18.1% (versus 13.2% for the S&P 500) • PayPal's Operating Cash Flow (OCF) for this duration was $7.5 billion, indicating a moderate OCF Margin of 23.4% (versus 14.9% for the S&P 500) • For the last four-quarter period, PayPal's Net Income was $4.1 billion, which demonstrates a moderate Net Income Margin of 13.0% (compared to 11.6% for the S&P 500) PayPal's balance sheet appears robust. • PayPal's Debt stood at $9.9 billion at the close of the most recent quarter, while its market capitalization is $70 billion (as of 6/13/2025). This results in a strong Debt-to-Equity Ratio of 13.4% (compared to 19.9% for the S&P 500). [Note: A lower Debt-to-Equity Ratio is preferred] • Cash (including cash equivalents) accounts for $11 billion of the $81 billion in Total Assets for PayPal. This results in a strong Cash-to-Assets Ratio of 13.3% (versus 13.8% for the S&P 500) PYPL shares have felt an effect that was slightly worse than the S&P 500 index during certain recent downturns. While investors remain hopeful for a mild landing by the U.S. economy, what could transpire if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes. • PYPL shares declined 41.9% from a high of $308.53 on July 23, 2021, to $179.32 on December 1, 2021, compared to a peak-to-trough decline of 25.4% for the S&P 500 • The stock is still not back to its pre-Crisis high • The highest price the stock achieved since then was 197.35 on December 8, 2021, and it is currently trading around $71 • PYPL shares fell 20.3% from a peak of $121.30 on July 24, 2019, to $96.64 on October 23, 2019, contrasted with a peak-to-trough drop of 33.9% for the S&P 500 • The stock completely rebounded to its pre-Crisis peak by February 14, 2020 In conclusion, PayPal's performance across the outlined parameters is summarized as follows: • Growth: Strong • Profitability: Neutral • Financial Stability: Very Strong • Downturn Resilience: Neutral • Overall: Strong This correlates with the stock's moderate valuation, which leads us to conclude that it is fairly priced, suggesting that the stock could be a relatively solid buy. Although there may be some potential upside for PYPL shares, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stocks benchmark (comprised of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices), delivering strong returns to investors. Why does this happen? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks has offered a responsive means to capitalize on favorable market conditions while mitigating losses when markets decline, as detailed in RV Portfolio performance metrics.
Yahoo
6 days ago
- Business
- Yahoo
Here's Why Paypal (PYPL) is a Strong Growth Stock
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors alike. While you may have an investing style you rely on, finding great stocks is made easier with the Zacks Style Scores. These are complementary indicators that rate stocks based on value, growth, and/or momentum characteristics. For growth investors, a company's financial strength, overall health, and future outlook take precedence, so they'll want to zero in on the Growth Style Score. This Score examines things like projected and historical earnings, sales, and cash flow to find stocks that will generate sustainable growth over time. PayPal Holding, Inc., a San Jose, CA-based company, has emerged as one of the largest online payment solutions providers on the back of its strong product portfolio and two-sided platform that enables it to offer a smooth and secure transaction facility to both customers and merchants. PYPL is a Zacks Rank #3 (Hold) stock, with a Growth Style Score of B and VGM Score of A. Earnings are expected to grow 9.3% year-over-year for the current fiscal year, with sales growth of 3.2%. 11 analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025. The Zacks Consensus Estimate has increased $0.07 to $5.08 per share. PYPL boasts an average earnings surprise of 14%. On a historic basis, Paypal has generated cash flow growth of 7.7%, and is expected to report cash flow expansion of 13.2% this year. PYPL should be on investors' short lists because of its impressive growth fundamentals, a good Zacks Rank, and strong Growth and VGM Style Scores. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-06-2025
- Business
- Yahoo
Bitcoin on Track to Hit New All-Time High: 3 Stocks in Focus
The cryptocurrency rally, which had slowed at the end of May, has regained momentum and is on track to reach a new high as investor confidence continues to bolster the market. Bitcoin (BTC), which reached a record high in May, gave up some of the gains but has since bounced back and is trading above the $110,000 mark. The pullback seen in late May was largely due to profit-taking by the big whales, which have been selling off Bitcoin as tariff tensions continued to worry them. However, positive economic data, such as easing inflation, has raised expectations that the Federal Reserve might begin cutting interest rates soon, which is likely to benefit the crypto market. In this environment, investing in crypto-related stocks could be a strategic move. Companies like PayPal Holdings PYPL, Visa Inc. V, and CME Group Inc. CME stand out for their strong growth potential heading into 2025. All three have seen upward revisions in earnings estimates over the past three months. Bitcoin hit a record high of $111,886.41 on May 22. However, the cryptocurrency gave up some of its gains in the final week of May. The decline can be attributed to profit-taking. However, Bitcoin has still managed to stay above the $100,000 mark for more than 30 days at a stretch. The rally regained momentum over the weekend, and on Monday, Bitcoin price surged more than 4% and was hovering around 110,500. The continued rally in Bitcoin is being driven by a mix of favorable developments, including improving U.S.-China trade relations, optimism over upcoming crypto regulations and increasing institutional investment. Investor sentiment has further improved after President Donald Trump announced a temporary pause on new tariffs, and the United States and China agreed to a 90-day halt on imposing fresh duties. Talks between Trump and Chinese President Xi Jinping are scheduled, alongside negotiations with other global trading partners. Meanwhile, regulatory progress in the crypto space is boosting confidence. The GENIUS Act — a legislative proposal aimed at regulating stablecoins — has made progress in the Senate. Trump and his crypto/AI advisor, David Sacks, have continued voicing strong support for pro-crypto policies, signaling a more favorable future for the digital asset industry. PayPal Holdings provides digital wallet services that enable users to purchase, transfer and sell various cryptocurrencies, such as Bitcoin, Ethereum, Bitcoin Cash and Litecoin. Through PYPL, cryptocurrencies can be used to pay for goods and services from online merchants. Additionally, PayPal's mobile wallet platform, Venmo, allows users to engage in cryptocurrency buying and selling activities. PayPal's expected earnings growth rate for the current year is 9.3%. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 90 days. PYPL currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Visa is taking a significant step toward modernizing cross-border money movement. In a move aimed at enhancing the efficiency of global transactions, V is expanding its stablecoin settlement capabilities to the high-performing Solana blockchain. This expansion of V includes collaboration with prominent merchant acquirers Worldpay and Nuvei, marking a pivotal development in the world of digital payments. Visa's expected earnings growth rate for the current year is 12.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 90 days. V currently has a Zacks Rank #3. CME Group Inc.'s options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange's cash-settled standard and micro BTC and ETH futures contracts. CME Group's expected earnings growth rate for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the last 90 days. CME presently has a Zacks Rank #3. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CME Group Inc. (CME) : Free Stock Analysis Report Visa Inc. (V) : Free Stock Analysis Report PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
