PayPal Holdings, Inc. (PYPL) stock analysis

P/E below its 5-year median

PayPal's P/E of 11.4 is below its own 5-year median of 17.5.

P/E below the industry

PayPal's P/E of 11.4 is below the Miscellaneous Business Services median of 25.8.

EV/EBITDA below its 5-year median

PayPal's EV/EBITDA of 7.7 is below its 5-year median of 11.2.

P/B above the industry

PayPal's price-to-book of 2.54 is above the Miscellaneous Business Services median of 2.48.

Trading below fair value

The share price of $59.48 is below our fair value estimate of $97.83.

Margin of safety over 20%

The price is 39.2% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 6.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 37.3% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -3.9% over the last twelve months, against a 5-year average of 4.5% a year.

Growing slower than the industry

Revenue grew 4.4% over the last twelve months; the Miscellaneous Business Services median is 9.9%.

Guidance issued

The latest outlook (FY'26 GAAP EPS, Oct 27, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin trend

This company does not report gross profit.

Return on equity over 15%

Return on equity was 23.8% over the last twelve months and averaged 19.6% over five years.

Return on capital over 10%

Return on invested capital was 21.2%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

PayPal's return on equity of 23.8% is above the Miscellaneous Business Services median of 6.8%.

Earnings grew over 5 years

Net income grew 4.5% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 13.8% over the last twelve months, against a 5-year average of 13.7%.

Net margin above the industry

PayPal's net margin of 13.8% is above the Miscellaneous Business Services median of 3.8%.

High debt

Debt is 69.1% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 44.7% five years ago to 69.1%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 52.6% of total debt.

Interest well covered

Operating income covers interest expense 12.0 times.

Short-term assets cover short-term debts

Current assets are 1.26 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 1.93; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

PayPal paid dividends worth 0.9% of the share price over the last twelve months.

Yield below Treasuries

The 0.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; PayPal yields 0.9%.

Dividend stability

Fewer than five years of dividend history.

Covered by earnings

Dividends take 10.6% of net income.

Covered by free cash flow

Dividends take 7.9% of free cash flow.