PYPL Stock Study (10-31-25)

I recently did a stock study on PayPal Holdings Inc. (PYPL) with a closing price of $67.93. Previous studies are here and here.

Value Line (VL) writes:

     > PayPal Holdings, Inc. operates a technology platform that
     > enables digital and mobile payments by consumers and merchants
     > throughout the world. It offers a wide range of payment
     > solutions under the brands: PayPal, PayPal Credit, Venmo, Xoom,
     > Paydiant, and Braintree. Has more than 430 million active
     > users. In 2024, approximately 26.3 billion transactions were
     > completed on its platform. From 2002 to July 2015, PayPal was
     > a wholly-owned subsidiary of eBay.

Over the past decade, the large-size company has grown sales and EPS at annualized rates of 15.4% and 16.6%, respectively. Lines are mostly up, straight, and parallel except for EPS dip in ’21 and larger decline in ’22. Five- (10-) year EPS R^2 is 0.04 (0.82) and VL gives an Earnings Predictability score of 50.

Over the past decade, PTPM trails peer and industry averages while ranging from 12.2% in ’22 to 23.6% in ’20 with a last-5-year mean of 17.4%. ROE trails peer and industry averages despite increasing from 9.3% in ’15 to 19.6% in ’24 with a last-5-year mean of 18.7%. Debt-to-Capital is less than peer and industry averages despite increasing from 0% in ’15 to 32.6% in ’24 with a last-5-year mean of 31.7%.

Quick Ratio is 1.3 and Interest Coverage is 15 per M* who assigns “Narrow” Economic Moat, gives “Standard” rating for Capital Allocation, but only a C grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 4.7% and 6.1% for ’25 and ’26, respectively (based on 38 analysts).
• Zacks projects YOY 4.4% and 5.2% for ’25 and ’26, respectively (11 analysts).
• VL projects 5.7% annualized growth from ’24-’29.
• CFRA projects 4.7% YOY and 4.8% per year for ’25 and ’24-’26.
• M* provides a 2-year CAGR of 5.0% and projects 6.0% annualized for the next 10 years in its analyst note.

My 4.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects annualized growth of 12.8% and 11.1% for ’24-’26 and ’24-’27 (based on 46 analysts).
• Nasdaq.com projects 11.5% and 9.9% per year for ’25-’27 and ’25-’28 [8, 8, and 1 analyst(s) for ’25, ’27 and ’28].
• Seeking Alpha projects 4-year annualized growth of 12.3%.
• Finviz gives ACE 5-year annualized growth of 12.5% (16).
• Argus projects 5-year annualized growth of 12.0%.
• LSEG gives LTG estimate of 12.3%.
• YF projects YOY 14.9% and 9.1% for ’25 and ’26, respectively (42).
• Zacks projects YOY 13.8% and 9.8% for ’25 and ’26 (16) along with 5-year annualized growth of 12.6%.
• VL projects 13.2% annualized growth from ’24-’29.
• CFRA projects 15.7% YOY and 11.9% per year for ’25 and ’24-’26, respectively, along with a 3-year CAGR of 15.0%.
• M* projects long-term annualized growth of 17.0%.

My 9.0% forecast is below the long-term-estimate range (mean of seven: 13.1%). Initial value is ’24 EPS of $3.99/share instead of 2025 Q3 $4.99 (annualized).

My Forecast High P/E is 22.0. Over the last 10 years, high P/E increases from 42.5 in ’15 to 93.8 in ’22 before falling to 23.5 in ’24 for a last-5-year mean of 59.5 and a last-5-year-mean average P/E of 43.0. I am below the range.

My Forecast Low P/E is 13.0. Over the last 10 years, low P/E ranges from 13.1 in ’23 to 50.9 in ’21 with a last-5-year mean of 26.6. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $51.90 is default based on initial value given above. This is 23.6% less than the previous close and 7.2% less than the 52-week low.

These inputs land PYPL in the BUY zone with a U/D ratio of 4.2. Total Annualized Return (TAR) is 14.7%.

PAR (using Forecast Average—not High—P/E) of 9.6% is less than I seek in a large-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 87 studies (my study and 26 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 5.0%, 10.0%, 22.5, and 13.5, respectively. I am lower across the board. VL’s projected average annual P/E of 16.0 [down from 25.0 on 5/3/2024] is less than MS (18.0) and less than mine (17.5).

MS high / low EPS are $7.37 / $4.56 versus my $6.14 / $3.99 (per share). My high EPS is less due to a lower growth rate and initial value. VL’s high EPS is in the middle at $7.00.

MS LSPF of $56.20 implies a Forecast Low P/E of 12.3: lower than the above-stated 13.5. MS LSPF is 8.7% less than the default $4.56/share * 13.5 = $61.56 resulting in more conservative zoning. MS is still 8.3% greater than mine, however.

I think MOS is solid in this study because my inputs are near or below analyst/MS estimates and historical ranges. Also consistent is MS TAR (17.6%) exceeding mine by 2.9%/year.

With regard to valuation, PEG is 1.0 and 1.4 per Zacks/M* and my projected P/E, respectively: fairly valued. Relative Value [(current P/E) / 5-year-mean average P/E] is fire-sale cheap at 0.32.

Per U/D, PYPL is a BUY under $72.70/share. BI TAR criterion is met [135.1 / ((14.87 / 100 ) +1 ) ^ 5] ~ $67.50 with a forecast high price ~$135 (dividend payment to be started soon).

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