PYPL - PayPal Can Deliver A Big Surprise In EPS Growth

2024-06-25 01:20:29 ET

Summary

• PayPal has improved the EPS growth trajectory and is showing the same EPS growth momentum it had pre-pandemic.
• Between 2015 and 2019, the EPS grew from 0.8 to 2.1 which is equal to 22% CAGR and the recent EPS growth projections show a similar trend line.
• PayPal is investing close to $5 billion annually on buybacks which should improve EPS growth by 8%-10% on a standalone basis.
• The recent drive to optimize headcount should also improve the margins and have a significant impact on EPS growth.
• Despite the rising competition from Big Tech and other competitors, PayPal should be able to show high single-digit revenue growth.

PayPal ( PYPL ) (PYPL:CA) stock has continued to face negative sentiment from Wall Street and has been range-bound between $55-$65 for the last few quarters. On the other hand, the company is showing silver linings in terms of key metrics. The EPS growth trajectory is reaching the trend we saw before the pandemic. Between 2015 and 2019, PayPal’s TTM diluted EPS increased from $0.8 to $2.1 which is equal to 22% CAGR. The recent quarterly GAAP EPS growth was 18%....

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