Attractive P/E Ratio
Reasonable Price-to-Sales Ratio
Strong Return on Equity
Healthy Gross Profit Margin
Low Debt-to-Equity Ratio
Strong Interest Coverage
🏆 Strong Operating Performance
🔑 Innovative Product Developments
🤝 Strengthening Partnerships
🚀 Focus on Product Adoption
📈 Strategic Initiatives for Growth
High EV/EBITDA Ratio
Moderate Net Profit Margin
Low Cash Ratio
⚠️ Headwinds from Renegotiations
⏳ Challenges in Market Conditions
Overall, PayPal demonstrates strong business quality through its solid financial performance, innovative product offerings, and strategic partnerships, although it faces challenges from market conditions and client renegotiations. The future prospects remain positive with a focus on innovation and growth initiatives, but market uncertainties could pose risks.
Analysis Date: February 4, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$131.13
Current Market Price: $57.92
IV/P Ratio: 2.26x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
56.00000000000001%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for PYPL
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (14.03)
P/B ratio ≤ 1.5 (2.85)
Current ratio ≥ 2.0 (1.26x)
Long-term debt < Net current assets (0.78x)
Margin of safety (56.00000000000001%)
PYPL does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A return on equity (ROE) of 20.25% reflects effective management and the ability to generate profits from shareholders' equity.
The gross profit margin of 43.26% indicates strong sales efficiency, allowing the company to retain a significant portion of sales as gross profit.
The net profit margin of 13.05% is respectable but could be improved to reflect better overall profitability.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
20.25%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.37%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
43.26%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
13.05%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
A debt-to-equity ratio of 0.48 indicates a conservative approach to leverage, suggesting financial stability and lower risk.
An interest coverage ratio of 14.73 signifies that the company comfortably meets its interest obligations, reflecting strong financial health.
The cash ratio of 0.14 suggests limited liquidity, which may hinder the company’s ability to cover short-term obligations.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.48x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.26x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
PayPal delivered a solid performance in 2024, with total payment volume growing by 10% to nearly $1.7 trillion and revenue reaching $32 billion, up 7%. The company also generated $6.8 billion in free cash flow and completed $6 billion in share buybacks, indicating financial strength and a commitment to returning value to shareholders.
PayPal has focused heavily on innovation, launching several new products and enhancements, such as PayPal Everywhere, Fastlane, and improvements to branded checkout. These innovations are expected to drive higher transaction margins and customer engagement.
Significant partnerships have been formed to drive Fastlane adoption, which is crucial for expanding PayPal's reach and enhancing its value proposition to merchants and consumers.
The company is experiencing headwinds due to ongoing renegotiations with large clients, which could impact revenue growth in the short term. This strategic shift may lead to lower transaction volumes initially but is expected to improve profitability.
PayPal aims to scale the adoption of its innovations in 2025, with a focus on educating customers and driving engagement through enhanced marketing strategies. This is expected to lead to increased active accounts and higher revenue per user.
PayPal's key strategic initiatives for 2025 include winning checkout, growing Venmo, and expanding support for small businesses. These initiatives are expected to contribute positively to transaction margins and overall company growth.
The company anticipates some market volatility and potential softness in international markets, which could affect performance. The guidance for flat to low single-digit revenue growth in Q1 highlights these uncertainties.