Since PayPal Holdings Inc (NASDAQ:PYPL) released its earnings in December 2017, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 24.94% in the upcoming year relative to the past 5-year average growth rate of 16.86%. Presently, with earnings at $1,795.0M, we should see this growing to $2,242.7M by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here. See our latest analysis for PayPal Holdings
How is PayPal Holdings going to perform in the near future?
Longer term expectations from the 43 analysts covering PYPL’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for PYPL, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2021, PYPL’s earnings should reach $3,175.0M, from current levels of $1,795.0M, resulting in an annual growth rate of 15.96%. This leads to an EPS of $2.67 in the final year of projections relative to the current EPS of $1.49. The primary reason for earnings growth is due to cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, PYPL’s profit margin will have expanded from 13.71% to 15.37%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For PayPal Holdings, I’ve compiled three key aspects you should look at:
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1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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2. Valuation: What is PayPal Holdings worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PayPal Holdings is currently mispriced by the market.
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3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PayPal Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.