Credit Services
Updated on August 3, 2024, by Mark Pukhov
Paypal Holdings, Inc. is an American technology company that facilitates digital payments, serving as a middleman between merchants and consumers.
From 2015 to now, its stock has underperformed compared to Nvidia, Tesla, and Apple, delivering negative returns in the past 5 years.
5Y:
-44.06%
63.11%
ALL:
This is due to financial struggles. Despite growing revenues, net income remains flat, indicating sacrificed profit margins for growth.
1. Trailing PE
2. PEG ratio
3. Trailing P/FCF
4. Trailing P/S
5. mrq PB ratio
6. Intrinsic value
PayPal's PE ratio is lower than the credit services industry's average of 22.62 and stays within the value investor threshold of 15-20.
paypal's
15.01
Its PEG ratio is slightly lower than the industry average of 1.56 and doesn't exceed the value investor's threshold of 1.0, which is a good sign.
paypal's
0.94
PayPal's P/FCF ratio is significantly lower than the industry average of 12.23 and doesn't exceed the value investors' threshold of 10, making it quite attractive.
paypal's
9.46
As you've noticed, the KPIs we check aim to determine if the stock is overvalued or undervalued, as the goal of any stock analysis is to assess if it's a good deal.
The company's price-to-sales ratio is twice as low as the industry average of 4.07,
paypal's
2.04
slightly exceeding the typical value investor's preference of 1-2 or lower.
PayPal's price-to-book ratio also slightly exceeds the typical value investor's threshold of 3.0 and is lower than the industry average of 5.15, which is still good.
paypal's
3.10
The last KPI that we'll look into is PayPal's intrinsic value (IV). The most important thing is that the market price should be lower than the company's intrinsic value.
The market price of $61.98 for PayPal is 24% lower than its base-case intrinsic value, and additionally, it is 48% lower than its best-case IV.
$81.16
$118.31
Although it indicates a margin of safety for investors in both scenarios, it falls short of the 50% discount or higher that Warren Buffett typically seeks.
Investing in PayPal carries risks, including:
1. Security vulnerabilities and cyberattacks
2. Business interruptions and system failures
3. Technological lag
4. Complex regulations
5. Competition, etc.
While there are risks to investing in PayPal, that doesn't mean they'll come true. Let's see what analysts say about investing in this stock.
“... the core business is growing, and new leadership is innovating. The fundamentals seem to tell investors that PayPal has brighter days ahead.”
#1
“PayPal stock has received a consensus rating of buy. The average rating score is and is based on 55 buy ratings, 36 hold ratings, and 0 sell ratings.”
#2
In conclusion, PayPal's stock looks attractive. If you're sure it has a competitive edge, it's worth investing; otherwise, it won't hurt to delve deeper into its financial history.