Paypal - too cheap?
PayPal's stock looks undervalued, trading at 6-year lows and a forward P/E ratio of 12.3, despite a strong Q1 performance with respectable transaction revenues, total payment volume, and growth in value-added services.
Operating expenses are well-managed, contributing to substantial growth in operating income and earnings per share, while consensus estimates suggest mid-to-high teens EPS compound annual growth rate.
Market concerns, such as PayPal's Q2 revenue guidance and increased competition, are offset by the Moderate Buy consensus rating, suggesting a 60.7% upside potential.
The involvement of activist investor Elliott Management and the potential sale of the cross-border payment unit, Xoom, signal strategic changes that could enhance PayPal's performance.
PayPal still rides the wave of the growth in e-commerce, with 12% payment volume increase in Q1 2023, and a rise in peer-to-peer transfers, demonstrating resilience in a challenging macroeconomic environment.
The fundamentals of this company have become detached from the share price, making this a long term buy and hold with hugely asymmetrical risk/return profile.
Shorter term, the move back to the highly developed Point of Control would represent over 20% growth, which I see as a high probability outcome within weeks.
Operating expenses are well-managed, contributing to substantial growth in operating income and earnings per share, while consensus estimates suggest mid-to-high teens EPS compound annual growth rate.
Market concerns, such as PayPal's Q2 revenue guidance and increased competition, are offset by the Moderate Buy consensus rating, suggesting a 60.7% upside potential.
The involvement of activist investor Elliott Management and the potential sale of the cross-border payment unit, Xoom, signal strategic changes that could enhance PayPal's performance.
PayPal still rides the wave of the growth in e-commerce, with 12% payment volume increase in Q1 2023, and a rise in peer-to-peer transfers, demonstrating resilience in a challenging macroeconomic environment.
The fundamentals of this company have become detached from the share price, making this a long term buy and hold with hugely asymmetrical risk/return profile.
Shorter term, the move back to the highly developed Point of Control would represent over 20% growth, which I see as a high probability outcome within weeks.
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