It’s time to breakdown one of the most prominent fintech companies in the world. Here is the breakdown on $PYPL, otherwise known as PayPal.
Current Price: $242.46
52/Wk High: $244.25
52/Wk Low: $82.07
Market Cap: $284.1 Billion
Read below for the breakdown!
PayPal is one of the most well-known technologies and payments platforms that is used for a vast multitude of digital transactions and payments.
PayPal’s platform is also very popular among online retailers and is often used as a payment system amongst many digital shops.
Furthermore, PayPal’s portfolio consists of PayPal Credit, Venmo, Xoom, Braintree, Paydiant, and the original PayPal platform.
In recent news, PayPal jumped into the cryptocurrency world allowing PayPal users to buy, hold, and sell Bitcoin as well as Ethereum and Bitcoin Cash.
Not only that, but PayPal recently invested in the leading startup Crytpo Tax Automation company called TaxBit, which is also being funded by Coinbase Ventures and Winklevoss Capital.
Both moves by PayPal, show management is already building the foundation to be a major competitor in the cryptocurrency industry that is expected to explode in the coming years.
Shifting into earnings, PayPal beat in the most recent quarter, Q3 2020, reporting an EPS of $1.07, much better than the expected EPS consensus of $0.94. On a year over year basis, EPS saw a 75.41% improvement.
PayPal reported Q3 revenues of $5.46 billion, representing a 25% increase year over year. Not only that, but management went on to report that operating income increased by 40% year over year to $980 million.
Management also reported that Total Payment Volume (TPV) increased by a whopping 38%, totaling $247 billion. Even more impressively, PayPal reported 15.2 million (+55% YoY) net new active accounts throughout the quarter and ended Q3 with 361 million active PayPal accounts.
Rounding out the third quarter, GAAP operating margin landed at 17.9%, representing a 198 basis point expansion.
PayPal went on to raise FY 2020 earnings guidance as well, now expecting TPV growth of 30% for the year and revenues to increase 20% to 21%.
On a final note, PayPal management expects FY 2020 GAAP EPS to grow 37% to 38% and that the company will add a total of 70 million net new accounts to the PayPal platform by the end of FY 2020.
Shifting into the balance sheet, the numbers are quite solid.
Total Debt: $8.937 Billion
Total Liabilities: $47.099 Billion
Total Assets: $65.582 Billion
Cash & Short Term Inv: $14.158 Billion
As for valuation, PayPal is currently quite expensive but not too far gone.
Price to Earnings: 91.57x
Price to Sales: 14.00x
Price to Book: 15.37x
Price to Cash Flow: 53.70x
Management has done a solid job as well, with leadership continuing to lead the way.
Return on Equity: 17.97%
Return on Assets: 5.43%
Return on Invested Capital: 11.60%
Given the numbers, the analysts are neutral with a mean price target of $230.86/share, representing a -4.78% downside.
It is also important to note that the high price target is $290.00/share, representing a 19.61% upside, while the low price target is $200.00/share, representing a -17.51% downside.
On the flip side, the big money is quite involved with 83.51% of PayPal being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and State Street Global Advisors.
On a technical basis, PayPal is quite bullish. According to the six-month charts, the MACD is in the process of crossing back to the upside within a range of 7.05 down to 6.24.
The six-month charts are also indicating an RSI of 64.09 and a CCI of 93.37, both of which are on the high end.
In short, PayPal is one of the best fintech plays given consistent growth, a growing market, and a management team that consistently delivers solid performance.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.