PYPL - PayPal May Have Turned A Corner

2024-07-16 12:32:06 ET

Summary

• PayPal Holdings, Inc. stock price has remained stagnant due to EPS uncertainties.
• Despite EPS headwinds, I see improvement in revenues, earnings, and operating margins.
• Further positives including its leading market share, loyal user base, strong balance sheet, and cheap valuation ratios.

PYPL stock is not loved by the market

I last wrote about PayPal Holdings, Inc. (PYPL) a bit more than 3 months ago (on April 9, 2024). As illustrated by the screenshot below, that article was titled “ A Good GARP Stock Made Even Better By Buybacks .” As the title suggests, I rated PYPL as a BUY based on the consideration of PEG (P/E growth ratio) and aggressive share buybacks. More specifically, I argued that:

PayPal Holdings, Inc. stock prices have remained stagnant recently, but its earnings have been improving, with projected growth in the next few years. At ~13x P/E, it is simply a good GARP opportunity (growth at reasonable price) considering its scale, differentiating business model, and growth potential. The company's aggressive share buybacks further enhance the opportunity.

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