Stock (Symbol) |
PayPal (PYPL) |
Stock Price |
$297 |
Sector |
Financial |
Data is as of |
July 15, 2021 |
Expected to Report |
July 29 |
Company Description |
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Sharek’s Take |
![]() PayPal looks to be on its way to becoming the world’s top Financial stock as its developing tools to manage people’s financial lives. Tools and services include enhanced direct deposit an check cashing, budget and savings tools, bill pay, investment alternatives including cryptocurrency, subscription management, buy now & pay later, as well as Honey’s shopping tools such as wish lists, price monitoring, deals, coupons and rewards. The company has a catalyst in Venmo. Venmo is a free digital wallet that lets you make and share payments with friends for free (such as splitting dinner). This year, PayPal launched a Venmo credit card (issued by Synchrony and powered by Visa) that gives the user the ability to manage the card right in the Venmo app. PayPal might have a future catalyst in Honey, a free online coupon service (in a browser extension) that applies coupons to items you’re buying. Honey also comes with a mobile app where consumers can throw stuff from different stores into one shopping cart, get coupons applied automatically, and pay for it all at once. PYPL paid $4 Billion in cash for Honey in January 2020. Buy Now, Pay Later is a new catalyst for the company, as its shown a 15% increase in transactions and customer spend, on more than $1 billion in sales in the U.S. alone. Also, PayPal is now available as a payment method on Alibaba’s wholesale marketplace and on AliExpress. Stats from last qtr include:
PayPal is making tons of money and uses its cash to buy back stock and make great acquisitions. Management plans to return 40-50% of cash flow to investors during the next five years. Last qtr it had free cash flow of $1.54 billion, up 27% from the same qtr a year ago. The stock has an Est. LTG of 24% a year and a P/E of 63. I think PayPal should be be the biggest FinTech company in the world in two to three years, and the party might get started this qtr when the new all-in-one payment wallet debuts. PayPal is a top holding in my Growth Portfolio. |
One Year Chart |
![]() During the past three qtrs, the P/E has risen from 42 to 2 and now 63. That’s got to zap some of the long-term upside. My Fair Value on this stock is a P/E of 55, so the current P/E is in red, as I think the stock is overvalued. The Est. LTG of 22% slightly lower than the 23 P/E last qtr. I think this is a 30% to 35% grower this qtr. Last qtr I felt it was a 30-40% grower. |
Earnings Table |
![]() Annual Profit Estimates got a nice jump this qtr. That TPV growth of 50% last qtr is impressive. Qtrly profit Estimates are for 3%, 3%, 9% and 19% profit growth the next 4 qtrs. Profit growth is expected to slow this qtr. PYPL did beat the street by 22 cents last qtr, and if it does that next qtr it will mean 26% profit growth. That’s still good enough for the stock to keep its upward momentum. |
Fair Value |
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Bottom Line |
![]() PayPal’s new digital wallet should be a game changer. We all know what we want from a payment app. We want interest on our deposits, low transfer fees, the best prices on purchases, and cash back on purchases. This new PayPal app might not check every box when it launches, but I think over time it will. PYPL moves up from 11th to 10th in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
10 of 38Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |