Is PayPal Stock a Buy at Less Than 10 Times Next Year's Earnings Guidance?
Just because a stock is cheap doesn't necessarily mean it's worth buying at a discount.
PayPal (PYPL) stock has been struggling since its peak in 2021 as competitors like Stripe, Wise, Google Pay, and Apple Pay gained popularity. The stock is now 80% below its 2021 high and near its multiyear low. However, this may present an opportunity for investors, as the stock is currently trading at less than 10 times next year's projected earnings per share of $5.77.
Despite the overall decline in growth, PayPal's second-quarter revenue increased by 3% year-over-year, driven by an 8% increase in total transactions and 10% growth in total payment volume. While earnings were slightly down, the company raised its full-year profit guidance. PayPal has also maintained a strong net margin of nearly 13%, as it turned $17 billion in revenue into $2.2 billion in net income during the first half of 2026.
This profitability, along with the repurchase of nearly 10% of its outstanding stock over the past year, suggests that the company is still creating value. Furthermore, PayPal has 439 million active accounts, with 228 million customers using them at least once a month. This indicates that the company can still attract and retain customers, even if the growth rate is not spectacular.
Investors should approach this opportunity with caution, as the stock is now valued more as a value name than a growth stock.
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