PayPal Holdings Inc (PYPL): A Deep Dive into Financial Metrics and Competitive Strengths

Unpacking the Growth and Competitive Edges of PayPal Holdings Inc (PYPL)

PayPal Holdings Inc (PYPL, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at 58.16, PayPal Holdings Inc has witnessed a daily gain of 0.48%, marked against a three-month change of -13.21%. A thorough analysis, underlined by the GF Score, suggests that PayPal Holdings Inc is well-positioned for substantial growth in the near future.

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What Is the GF Score?

The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.

PayPal Holdings Inc's GF Score components are as follows:

Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and growth rank, and a moderate financial strength rank, GuruFocus assigned PayPal Holdings Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.

Understanding PayPal Holdings Inc Business

PayPal Holdings Inc, with a market cap of $63.86 billion and sales of $28.56 billion, was spun off from eBay in 2015 and provides electronic payment solutions to merchants and consumers, with a focus on online transactions. The company had 435 million active accounts at the end of 2022. The company also owns Venmo, a person-to-person payment platform. With an operating margin of 16.68%, PayPal Holdings Inc has demonstrated strong profitability in its operations.

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Financial Strength Breakdown

According to the Financial Strength rating, PayPal Holdings Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for PayPal Holdings Inc stands impressively at 13.61, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.37, PayPal Holdings Inc's strategic handling of debt solidifies its financial health.

Profitability Rank Breakdown

The Profitability Rank shows PayPal Holdings Inc's impressive standing among its peers in generating profit. The Piotroski F-Score confirms PayPal Holdings Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding and operating efficiency. PayPal Holdings Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.

Growth Rank Breakdown

Ranked highly in Growth, PayPal Holdings Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 16.7%, which outperforms better than 72.38% of 496 companies in the Credit Services industry. Moreover, PayPal Holdings Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 8.3, and the rate over the past five years is 15.2. This trend accentuates the company's continued capability to drive growth.

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Conclusion

Given the company's strong financial strength, profitability, and growth metrics, the GF Score highlights PayPal Holdings Inc's unparalleled position for potential outperformance. This analysis suggests that PayPal Holdings Inc is a promising investment opportunity for those seeking robust growth and profitability. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure