PayPal Holdings, Inc. – Value Analysis (NASDAQ:PYPL) : January 5, 2017

Capitalcube gives PayPal Holdings, Inc. a score of 79.

Our analysis is based on comparing PayPal Holdings, Inc. with the following peers – WeedHire International, Inc., Yahoo! Inc., root9B Holdings Inc and Vapor Hub International, Inc. (WDHR-US, YHOO-US, RTNB-US and VHUB-US).

Investment Outlook

PayPal Holdings, Inc. has a fundamental score of 79 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • PayPal Holdings Inc’s current Price/Book of 3.49 is about median in its peer group.
  • PYPL-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • PYPL-US‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • PYPL-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While PYPL-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • PYPL-US currently does not have any debt.

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Leverage & Liquidity

PYPL-US currently does not have any debt.

  • We consider the company to have a Quick & Able profile as it currently does not have any debt. In comparison, the median level of debt as percent of enterprise value for its peer group is currently 7.88%.
  • All 4 peers for the company have an outstanding debt balance.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
WeedHire International, Inc. 105.17 0.31 -0.36 -75.12
Yahoo! Inc. 3.58 6.14 -4.09 61.7
root9B Holdings Inc 7.88 0.87 -28.5 -256.38
Vapor Hub International, Inc. 21.68 0.68 0.6 64.38
PayPal Holdings Inc 0 1.55 0 999
Peer Median 7.88 0.87 -2.22 61.7
Best In Class 3.58 6.14 0.6 999

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Company Profile

PayPal Holdings, Inc. enables digital and mobile payments on behalf of consumers and merchants worldwide. It provides a simpler and safer way for businesses of all sizes to accept payments from merchant websites, mobile devices and applications, and at offline retail locations through a range of payment solutions. It also facilitates person to person payments through PayPal, Venmo, and Xoom. The company was founded in January 2015 and is headquartered in San Jose, CA.

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