PAYPAL HOLDINGS INC (PYPL) Stock Fundamental Analysis
NASDAQ:PYPL - Nasdaq - US70450Y1038 - Common Stock - Currency: USD
Taking everything into account, PYPL scores 5 out of 10 in our fundamental rating. PYPL was compared to 101 industry peers in the Financial Services industry. While PYPL belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. PYPL has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
PYPL had positive earnings in the past year.
PYPL had a positive operating cash flow in the past year.
In the past 5 years PYPL has always been profitable.
In the past 5 years PYPL always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of PYPL (5.59%) is better than 78.22% of its industry peers.
PYPL's Return On Equity of 22.44% is amongst the best of the industry. PYPL outperforms 85.15% of its industry peers.
PYPL has a better Return On Invested Capital (13.48%) than 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 11.84%.
The last Return On Invested Capital (13.48%) for PYPL is above the 3 year average (11.47%), which is a sign of increasing profitability.
| 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 better Profit Margin (14.26%) than 62.38% of its industry peers.
In the last couple of years the Profit Margin of PYPL has remained more or less at the same level.
PYPL has a Operating Margin of 18.75%. This is in the better half of the industry: PYPL outperforms 65.35% of its industry peers.
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 61.39% of the companies in the same industry.
PYPL's Gross Margin has declined in the last couple of years.
| 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.
The debt/assets ratio for PYPL is higher compared to a year ago.
2.2 Solvency
PYPL has an Altman-Z score of 2.08. This is not the best score and indicates that PYPL is in the grey zone with still only limited risk for bankruptcy at the moment.
PYPL has a better Altman-Z score (2.08) than 74.26% of its industry peers.
PYPL has a debt to FCF ratio of 2.12. This is a good value and a sign of high solvency as PYPL would need 2.12 years to pay back of all of its debts.
PYPL has a Debt to FCF ratio of 2.12. This is in the better half of the industry: PYPL outperforms 77.23% 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 | 2.08 |
ROIC/WACC1.65
WACC8.18%
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 60.40% 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.
With a decent Quick ratio value of 1.30, PYPL is doing good in the industry, outperforming 62.38% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.3 | ||
| Quick Ratio | 1.3 |
3. Growth
3.1 Past
The earnings per share for PYPL have decreased by -8.05% in the last year.
PYPL shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 9.87% yearly.
PYPL shows a small growth in Revenue. In the last year, the Revenue has grown by 4.79%.
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
PYPL is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.09% yearly.
PYPL is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.57% yearly.
EPS Next Y4.29%
EPS Next 2Y7.57%
EPS Next 3Y9.24%
EPS Next 5Y11.09%
Revenue Next Year3.06%
Revenue Next 2Y4.37%
Revenue Next 3Y5.25%
Revenue Next 5Y5.57%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 14.55 indicates a correct valuation of PYPL.
The rest of the industry has a similar Price/Earnings ratio as PYPL.
Compared to an average S&P500 Price/Earnings ratio of 27.91, PYPL is valued a bit cheaper.
PYPL is valuated correctly with a Price/Forward Earnings ratio of 12.40.
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 (37.11), we can say PYPL is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.55 | ||
| Fwd PE | 12.4 |
4.2 Price Multiples
PYPL's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PYPL is cheaper than 65.35% of the companies in the same industry.
69.31% of the companies in the same industry are more expensive than PYPL, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.64 | ||
| EV/EBITDA | 10.55 |
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.
The decent profitability rating of PYPL may justify a higher PE ratio.
PEG (NY)3.39
PEG (5Y)1.47
EPS Next 2Y7.57%
EPS Next 3Y9.24%
5. Dividend
5.1 Amount
PYPL does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
71.45
-6.77 (-8.66%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)
Earnings (Next)
Inst Owners79.32%
Inst Owner Change0.14%
Ins Owners0.09%
Ins Owner Change0.28%
Market Cap69.49B
Analysts72.69
Price Target83.29 (16.57%)
Short Float %3.34%
Short Ratio3.47
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)0.05%
PT rev (3m)-4.26%
EPS NQ rev (1m)0.11%
EPS NQ rev (3m)6.65%
EPS NY rev (1m)-0.15%
EPS NY rev (3m)1.58%
Revenue NQ rev (1m)0.02%
Revenue NQ rev (3m)-0.12%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.71%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.55 | ||
| Fwd PE | 12.4 | ||
| P/S | 2.18 | ||
| P/FCF | 11.64 | ||
| P/OCF | 10.38 | ||
| P/B | 3.43 | ||
| P/tB | 7.68 | ||
| EV/EBITDA | 10.55 |
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)3.39
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 | 2.08 |
F-Score8
WACC8.18%
ROIC/WACC1.65
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 Y4.29%
EPS Next 2Y7.57%
EPS Next 3Y9.24%
EPS Next 5Y11.09%
Revenue 1Y (TTM)4.79%
Revenue growth 3Y7.82%
Revenue growth 5Y12.34%
Sales Q2Q%1.19%
Revenue Next Year3.06%
Revenue Next 2Y4.37%
Revenue Next 3Y5.25%
Revenue Next 5Y5.57%
EBIT growth 1Y15.85%
EBIT growth 3Y10.05%
EBIT growth 5Y15.61%
EBIT Next Year23.59%
EBIT Next 3Y12.87%
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%