PAYPAL HOLDINGS INC (PYPL) Stock Fundamental Analysis
NASDAQ:PYPL - Nasdaq - US70450Y1038 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to PYPL. PYPL was compared to 101 industry peers in the Financial Services industry. While PYPL has a great profitability rating, there are some minor concerns on its financial health. PYPL is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year PYPL was profitable.
In the past year PYPL had a positive cash flow from operations.
PYPL had positive earnings in each of the past 5 years.
Each year in the past 5 years PYPL had a positive operating cash flow.
1.2 Ratios
PYPL has a better Return On Assets (5.59%) than 80.20% of its industry peers.
PYPL has a Return On Equity of 22.44%. This is amongst the best in the industry. PYPL outperforms 85.15% of its industry peers.
PYPL's Return On Invested Capital of 13.48% is amongst the best of the industry. PYPL outperforms 88.12% of its industry peers.
The Average Return On Invested Capital over the past 3 years for PYPL is in line with the industry average of 11.69%.
The 3 year average ROIC (11.47%) for PYPL is below the current ROIC(13.48%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.59% | ||
| ROE | 22.44% | ||
| ROIC | 13.48% |
ROA(3y)4.44%
ROA(5y)4.96%
ROE(3y)17.47%
ROE(5y)18.52%
ROIC(3y)11.47%
ROIC(5y)10.62%
1.3 Margins
PYPL has a Profit Margin of 14.26%. This is in the better half of the industry: PYPL outperforms 62.38% of its industry peers.
PYPL's Profit Margin has been stable in the last couple of years.
Looking at the Operating Margin, with a value of 18.75%, PYPL is in the better half of the industry, outperforming 65.35% of the companies in the same industry.
PYPL's Operating Margin has improved in the last couple of years.
With a decent Gross Margin value of 41.40%, PYPL is doing good in the industry, outperforming 63.37% of the companies in the same industry.
In the last couple of years the Gross Margin of PYPL has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.75% | ||
| PM (TTM) | 14.26% | ||
| GM | 41.4% |
OM growth 3Y2.07%
OM growth 5Y2.92%
PM growth 3Y-7.41%
PM growth 5Y-1.18%
GM growth 3Y-4.8%
GM growth 5Y-2.04%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so PYPL is still creating some value.
PYPL has less shares outstanding than it did 1 year ago.
The number of shares outstanding for PYPL has been reduced compared to 5 years ago.
Compared to 1 year ago, PYPL has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.02 indicates that PYPL is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of PYPL (2.02) is better than 77.23% of its industry peers.
The Debt to FCF ratio of PYPL is 2.12, which is a good value as it means it would take PYPL, 2.12 years of fcf income to pay off all of its debts.
PYPL has a better Debt to FCF ratio (2.12) than 76.24% of its industry peers.
A Debt/Equity ratio of 0.56 indicates that PYPL is somewhat dependend on debt financing.
PYPL has a Debt to Equity ratio (0.56) which is in line with its industry peers.
Although PYPL does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 2.12 | ||
| Altman-Z | 2.02 |
ROIC/WACC1.62
WACC8.31%
2.3 Liquidity
PYPL has a Current Ratio of 1.30. This is a normal value and indicates that PYPL is financially healthy and should not expect problems in meeting its short term obligations.
With a decent Current ratio value of 1.30, PYPL is doing good in the industry, outperforming 61.39% of the companies in the same industry.
PYPL has a Quick Ratio of 1.30. This is a normal value and indicates that PYPL is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of PYPL (1.30) is better than 63.37% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.3 | ||
| Quick Ratio | 1.3 |
3. Growth
3.1 Past
PYPL shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -8.05%.
The Earnings Per Share has been growing by 9.87% on average over the past years. This is quite good.
Looking at the last year, PYPL shows a small growth in Revenue. The Revenue has grown by 4.79% in the last year.
The Revenue has been growing by 12.34% on average over the past years. This is quite good.
EPS 1Y (TTM)-8.05%
EPS 3Y2.76%
EPS 5Y9.87%
EPS Q2Q%-5%
Revenue 1Y (TTM)4.79%
Revenue growth 3Y7.82%
Revenue growth 5Y12.34%
Sales Q2Q%1.19%
3.2 Future
The Earnings Per Share is expected to grow by 11.09% on average over the next years. This is quite good.
Based on estimates for the next years, PYPL will show a small growth in Revenue. The Revenue will grow by 5.57% on average per year.
EPS Next Y4.33%
EPS Next 2Y7.51%
EPS Next 3Y9.52%
EPS Next 5Y11.09%
Revenue Next Year3.2%
Revenue Next 2Y4.47%
Revenue Next 3Y5.39%
Revenue Next 5Y5.57%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
PYPL is valuated correctly with a Price/Earnings ratio of 14.55.
PYPL's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 25.91. PYPL is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 12.41, the valuation of PYPL can be described as correct.
PYPL's Price/Forward Earnings is on the same level as the industry average.
When comparing the Price/Forward Earnings ratio of PYPL to the average of the S&P500 Index (21.85), we can say PYPL is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.55 | ||
| Fwd PE | 12.41 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PYPL is valued a bit cheaper than 70.30% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of PYPL indicates a somewhat cheap valuation: PYPL is cheaper than 74.26% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.64 | ||
| EV/EBITDA | 9.61 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PYPL does not grow enough to justify the current Price/Earnings ratio.
PYPL has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)3.36
PEG (5Y)1.47
EPS Next 2Y7.51%
EPS Next 3Y9.52%
5. Dividend
5.1 Amount
PYPL does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
71.45
-0.2 (-0.28%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)
Earnings (Next)
Inst Owners77.78%
Inst Owner Change2.25%
Ins Owners0.09%
Ins Owner Change0.29%
Market Cap69.49B
Analysts73.21
Price Target83.8 (17.28%)
Short Float %2.87%
Short Ratio2.36
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.11%
Min EPS beat(2)3.97%
Max EPS beat(2)12.26%
EPS beat(4)4
Avg EPS beat(4)11.13%
Min EPS beat(4)3.97%
Max EPS beat(4)18.26%
EPS beat(8)7
Avg EPS beat(8)8.17%
EPS beat(12)11
Avg EPS beat(12)7.31%
EPS beat(16)13
Avg EPS beat(16)5.31%
Revenue beat(2)0
Avg Revenue beat(2)-1.66%
Min Revenue beat(2)-2.67%
Max Revenue beat(2)-0.65%
Revenue beat(4)0
Avg Revenue beat(4)-1.73%
Min Revenue beat(4)-2.67%
Max Revenue beat(4)-0.65%
Revenue beat(8)1
Avg Revenue beat(8)-1.22%
Revenue beat(12)1
Avg Revenue beat(12)-1.34%
Revenue beat(16)1
Avg Revenue beat(16)-1.45%
PT rev (1m)-11.6%
PT rev (3m)-13.68%
EPS NQ rev (1m)5.81%
EPS NQ rev (3m)5.82%
EPS NY rev (1m)1.62%
EPS NY rev (3m)1.06%
Revenue NQ rev (1m)-0.06%
Revenue NQ rev (3m)-0.3%
Revenue NY rev (1m)-0.79%
Revenue NY rev (3m)-1.55%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.55 | ||
| Fwd PE | 12.41 | ||
| P/S | 2.18 | ||
| P/FCF | 11.64 | ||
| P/OCF | 10.38 | ||
| P/B | 3.43 | ||
| P/tB | 7.68 | ||
| EV/EBITDA | 9.61 |
EPS(TTM)4.91
EY6.87%
EPS(NY)5.76
Fwd EY8.06%
FCF(TTM)6.14
FCFY8.59%
OCF(TTM)6.88
OCFY9.63%
SpS32.79
BVpS20.83
TBVpS9.3
PEG (NY)3.36
PEG (5Y)1.47
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.59% | ||
| ROE | 22.44% | ||
| ROCE | 17.25% | ||
| ROIC | 13.48% | ||
| ROICexc | 19.93% | ||
| ROICexgc | 38.19% | ||
| OM | 18.75% | ||
| PM (TTM) | 14.26% | ||
| GM | 41.4% | ||
| FCFM | 18.71% |
ROA(3y)4.44%
ROA(5y)4.96%
ROE(3y)17.47%
ROE(5y)18.52%
ROIC(3y)11.47%
ROIC(5y)10.62%
ROICexc(3y)17.88%
ROICexc(5y)16.45%
ROICexgc(3y)39.06%
ROICexgc(5y)35.94%
ROCE(3y)14.68%
ROCE(5y)13.59%
ROICexcg growth 3Y7.88%
ROICexcg growth 5Y4.11%
ROICexc growth 3Y11.61%
ROICexc growth 5Y4.7%
OM growth 3Y2.07%
OM growth 5Y2.92%
PM growth 3Y-7.41%
PM growth 5Y-1.18%
GM growth 3Y-4.8%
GM growth 5Y-2.04%
F-Score8
Asset Turnover0.39
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 2.12 | ||
| Debt/EBITDA | 1.64 | ||
| Cap/Depr | 71.64% | ||
| Cap/Sales | 2.27% | ||
| Interest Coverage | 16.34 | ||
| Cash Conversion | 95.74% | ||
| Profit Quality | 131.28% | ||
| Current Ratio | 1.3 | ||
| Quick Ratio | 1.3 | ||
| Altman-Z | 2.02 |
F-Score8
WACC8.31%
ROIC/WACC1.62
Cap/Depr(3y)59.3%
Cap/Depr(5y)64.5%
Cap/Sales(3y)2.27%
Cap/Sales(5y)2.88%
Profit Quality(3y)157.9%
Profit Quality(5y)143.67%
High Growth Momentum
Growth
EPS 1Y (TTM)-8.05%
EPS 3Y2.76%
EPS 5Y9.87%
EPS Q2Q%-5%
EPS Next Y4.33%
EPS Next 2Y7.51%
EPS Next 3Y9.52%
EPS Next 5Y11.09%
Revenue 1Y (TTM)4.79%
Revenue growth 3Y7.82%
Revenue growth 5Y12.34%
Sales Q2Q%1.19%
Revenue Next Year3.2%
Revenue Next 2Y4.47%
Revenue Next 3Y5.39%
Revenue Next 5Y5.57%
EBIT growth 1Y15.85%
EBIT growth 3Y10.05%
EBIT growth 5Y15.61%
EBIT Next Year23.56%
EBIT Next 3Y13.51%
EBIT Next 5Y10.05%
FCF growth 1Y17.46%
FCF growth 3Y11.44%
FCF growth 5Y14.98%
OCF growth 1Y16.08%
OCF growth 3Y8.72%
OCF growth 5Y12.85%