Paypal (PYPL) Registers a Bigger Fall Than the Market: Important Facts to Note

In the latest trading session, Paypal (PYPL) closed at $54.94, marking a -3.31% move from the previous day. The stock's performance was behind the S&P 500's daily loss of 0.38%. On the other hand, the Dow registered a loss of 0.51%, and the technology-centric Nasdaq decreased by 0.29%.

Shares of the technology platform and digital payments company witnessed a loss of 4.95% over the previous month, trailing the performance of the Business Services sector with its gain of 1.03%, and the S&P 500's gain of 2.08%.

Market participants will be closely following the financial results of Paypal in its upcoming release. The company's earnings per share (EPS) are projected to be $1.32, reflecting a 1.49% decrease from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.7 billion, up 3.38% from the year-ago period.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $5.38 per share and revenue of $34.66 billion, indicating changes of +1.32% and +4.48%, respectively, compared to the previous year.

It is also important to note the recent changes to analyst estimates for Paypal. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.39% higher. Paypal is currently a Zacks Rank #3 (Hold).

In the context of valuation, Paypal is at present trading with a Forward P/E ratio of 10.56. For comparison, its industry has an average Forward P/E of 13.49, which means Paypal is trading at a discount to the group.

One should further note that PYPL currently holds a PEG ratio of 1.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Financial Transaction Services was holding an average PEG ratio of 0.88 at yesterday's closing price.

The Financial Transaction Services industry is part of the Business Services sector. This group has a Zacks Industry Rank of 164, putting it in the bottom 34% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow PYPL in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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