PAYPAL HOLDINGS INC (PYPL) Stock Fundamental Analysis
NASDAQ:PYPL - Nasdaq - US70450Y1038 - Common Stock - Currency: USD
Overall PYPL gets a fundamental rating of 6 out of 10. We evaluated PYPL against 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
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.
In the past 5 years PYPL always reported a positive cash flow from operatings.
1.2 Ratios
PYPL has a better Return On Assets (5.59%) than 81.19% 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.
Looking at the Return On Invested Capital, with a value of 13.48%, PYPL belongs to the top of the industry, outperforming 88.12% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for PYPL is in line with the industry average of 11.84%.
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 better Profit Margin (14.26%) than 62.38% of its industry peers.
PYPL's Profit Margin has been stable in the last couple of years.
PYPL has a Operating Margin of 18.75%. This is in the better half of the industry: PYPL outperforms 61.39% of its industry peers.
In the last couple of years the Operating Margin of PYPL has grown nicely.
PYPL has a Gross Margin of 41.40%. This is in the better half of the industry: PYPL outperforms 63.37% of its industry peers.
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 below the Cost of Capital (WACC), so PYPL is destroying value.
The number of shares outstanding for PYPL has been reduced compared to 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 1.97 indicates that PYPL is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 1.97, PYPL is in the better half of the industry, outperforming 76.24% of the companies in the same industry.
The Debt to FCF ratio of PYPL is 1.91, which is an excellent value as it means it would take PYPL, only 1.91 years of fcf income to pay off all of its debts.
PYPL's Debt to FCF ratio of 1.91 is fine compared to the rest of the industry. PYPL outperforms 75.25% 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 comparable to the rest of the industry.
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 | 1.91 | ||
| Altman-Z | 1.97 |
ROIC/WACC0.97
WACC13.85%
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.
PYPL has a better Current ratio (1.30) than 65.35% of its industry peers.
A Quick Ratio of 1.30 indicates that PYPL should not have too much problems paying its short term obligations.
With a decent Quick ratio value of 1.30, PYPL is doing good in the industry, outperforming 66.34% of the companies in the same industry.
| 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%.
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%.
PYPL shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 12.34% yearly.
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
Based on estimates for the next years, PYPL will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.09% on average per year.
PYPL is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.57% yearly.
EPS Next Y2.67%
EPS Next 2Y6.88%
EPS Next 3Y8.91%
EPS Next 5Y11.09%
Revenue Next Year3.8%
Revenue Next 2Y5.03%
Revenue Next 3Y5.49%
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
Based on the Price/Earnings ratio of 13.32, the valuation of PYPL can be described as correct.
PYPL's Price/Earnings is on the same level as the industry average.
PYPL is valuated cheaply when we compare the Price/Earnings ratio to 27.85, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 11.50, the valuation of PYPL can be described as very reasonable.
PYPL's Price/Forward Earnings is on the same level as the industry average.
PYPL's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.77.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.32 | ||
| Fwd PE | 11.5 |
4.2 Price Multiples
70.30% of the companies in the same industry are more expensive than PYPL, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of PYPL indicates a somewhat cheap valuation: PYPL is cheaper than 75.25% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.71 | ||
| EV/EBITDA | 8.7 |
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)4.99
PEG (5Y)1.35
EPS Next 2Y6.88%
EPS Next 3Y8.91%
5. Dividend
5.1 Amount
PYPL does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
65.41
-0.43 (-0.65%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)
Earnings (Next)
Inst Owners77.78%
Inst Owner Change0.29%
Ins Owners0.09%
Ins Owner Change0.28%
Market Cap63.61B
Analysts73.21
Price Target86.99 (32.99%)
Short Float %3.36%
Short Ratio2.69
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)8.1%
Min EPS beat(2)3.97%
Max EPS beat(2)12.23%
EPS beat(4)4
Avg EPS beat(4)11.12%
Min EPS beat(4)3.97%
Max EPS beat(4)18.26%
EPS beat(8)7
Avg EPS beat(8)8.16%
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)-1.65%
Min Revenue beat(2)-2.65%
Max Revenue beat(2)-0.65%
Revenue beat(4)0
Avg Revenue beat(4)-1.72%
Min Revenue beat(4)-2.65%
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)-1.44%
PT rev (1m)-9.6%
PT rev (3m)-8.8%
EPS NQ rev (1m)-0.08%
EPS NQ rev (3m)3.25%
EPS NY rev (1m)-0.49%
EPS NY rev (3m)2.58%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.34%
Revenue NY rev (1m)-0.44%
Revenue NY rev (3m)-1.69%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.32 | ||
| Fwd PE | 11.5 | ||
| P/S | 2 | ||
| P/FCF | 10.71 | ||
| P/OCF | 9.55 | ||
| P/B | 3.16 | ||
| P/tB | 7.07 | ||
| EV/EBITDA | 8.7 |
EPS(TTM)4.91
EY7.51%
EPS(NY)5.69
Fwd EY8.7%
FCF(TTM)6.11
FCFY9.33%
OCF(TTM)6.85
OCFY10.47%
SpS32.63
BVpS20.72
TBVpS9.26
PEG (NY)4.99
PEG (5Y)1.35
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 | 1.91 | ||
| Debt/EBITDA | 1.63 | ||
| 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 | 1.97 |
F-Score8
WACC13.85%
ROIC/WACC0.97
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 Y2.67%
EPS Next 2Y6.88%
EPS Next 3Y8.91%
EPS Next 5Y11.09%
Revenue 1Y (TTM)4.79%
Revenue growth 3Y7.82%
Revenue growth 5Y12.34%
Sales Q2Q%1.19%
Revenue Next Year3.8%
Revenue Next 2Y5.03%
Revenue Next 3Y5.49%
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%