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Is PayPal stock being bought now that it has hit a 52-week low?
PayPal is the largest digital platform that provides money transfer services. This growing company remains one of the most prominent assets in the stock market today. But is PayPal stock a buy in today's bull market?
Fundamental stock analysis of PayPal: Solid Balance Sheet
PayPal has a history of steady earnings and sales growth, dating back to at least 2010. That year, it earned just 29 cents per share. In 2019, the company reported earnings per share of $2.96 per share. In 2020, the company's earnings rose 31% to $3.88 per share. Analysts expect the company's earnings per share to grow 19% in 2021 and 14% in 2022.
The company's third-quarter business results were announced Nov. 8 after the close. The company said it earned $1.11 per adjusted share on revenue of $6.18 billion. PayPal also announced a new partnership with Amazon (AMZN), which will allow Venmo users to use the service as a payment option on Amazon's platform. Analysts expect the company to earn $1.07 per share on revenue of $6.23 billion.
Given the company's fundamental strength, PayPal's EPS rating is 82 out of a possible 99. The EPS rating measures a company's ability to grow earnings over the years, using the last two quarters and the previous quarter. Three to five years of profitable growth.
On the other hand, the SMR indicator indicates the company's sales, profit margin and return on equity. These metrics provide important information about a company's core strength. Driven by PayPal's double-digit sales growth in recent quarters, annual profit margins of 26% pre-tax, annual profit of 25% in 2020, an SMR rating of A.
According to IBD's stock review, PayPal stock scored below 46 out of 99 with a perfect IBD composite rating. Composite ratings make it easier for investors to measure a stock's fundamental and technical indicators.
PayPal Stock News
PayPal continues its battle with Block (SQ) in the crypto space. The two payment companies are marketing apps that allow shoppers to get discounts, premium payments and buy cryptocurrencies.
PayPal's Venmo and Square Cash apps started as personal transfers to family and friends. Now they have evolved into consumer financial services apps, leading to the growth of these leaders in the burgeoning digital payments sector.
In late 2020, PayPal launched a cryptocurrency trading service that allows customers to buy and sell bitcoins. In addition, PayPal customers can use the cryptocurrency to make purchases from 28 million merchants in its network, which will be operational in 2021.
On April 20, PayPal announced the cryptocurrency on Venmo. The new feature allows customers to use these three cryptocurrencies, in addition to Bitcoin Cash, to view cryptocurrency trends and execute trades.
On Sept. 8, PayPal announced a $2.7 billion deal to acquire Paidly, a Japanese payment platform for "buy now, pay later" financing plans.
On October 25, the company said it is not looking to acquire Pinterest (PINS) at this time. According to Bloomberg, PayPal has discussed the possibility of acquiring the company at a potential price of around $70 per share.
On Nov. 17, Bernstein downgraded the stock from "outperform" to "market perform" and lowered its price target from 260 to 220. The stock fell more than 5% in response.
Will PYPL stock be bought at this point?
According to IBD MarketSmith chart analysis, PayPal launched a 7-8% loss rule from a buy point at 296.11 in a small cup amid big losses in August, so this stock is not a buy at this time. There is no new buy point at this time, as the stock is down 40% from its 52-week high.
PayPal shares were up about 3% on Monday, trading at around 193.43. Earlier Monday, BMO Capital upgraded PayPal's rating from "market perform" to "outperform." On Dec. 1, the stock touched a 52-week low, trading at 179.15.
For more great stocks and nearby buys, check out our list of IBD stocks, such as those near the buy zone. For current trends in the stock market, check out IBD's signature daily analysis, The Big Picture.
Lehtonen, S. (2022, January 3). Is PayPal Stock A Buy Right Now After Hitting A 52-Week Low? Investor’s Business Daily. Retrieved January 3, 2022, from https://www.investors.com/research/paypal-stock-buy-now/?src=A00220