What’s in the Offing for PayPal (PYPL) This Earnings Season?
PayPal Holdings, Inc. PYPL is slated to release first-quarter 2018 results on Apr 25. The company has witnessed a remarkable streak of beating earnings estimates. In fact, in each of the preceding four quarters, PayPal outpaced the Zacks Consensus Estimate, with an average positive earnings surprise of 6.8%.
What the Zacks Model Unveils?
Our proven model does not conclusively show that PayPal is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
It should be noted that stocks with a Zacks Rank #4 or 5 (Sell rated) are best avoided, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Proofpoint carries a Zacks Rank of 3 and has an Earnings ESP of -0.43%, which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
However, the company is likely to continue reporting massive top and bottom-line growth on a year-over-year basis. The current Zacks Consensus Estimate for the quarter under review is pegged at 54 cents, indicating remarkable year-over-year growth of 22.7%. We note that the Zacks Consensus Estimate remained nearly unchanged over the past 30 days. Additionally, analysts polled by Zacks project revenues of roughly $3.58 billion, up 20.3% from the year-ago quarter.
PayPal Holdings, Inc. Price and EPS Surprise
So, let’s see how things are shaping up prior to this announcement.
What’s Driving This Upswing?
PayPal’s growth depends on two major metrics — Active Customer Accounts and Total Payment Volume — and the company has been witnessing massive growth in both metrics for the past several quarters. This trend is likely to have continued into the to-be-reported quarter as well.
According to our latest consensus estimates, PayPal’s active customer accounts will reach 233 million in the quarter, marking a year-over-year improvement of approximately 15%. Similarly, total payment volume is anticipated to surge nearly 30% year over year to $128.7 billion.
The upswing will mainly be driven by several partnerships and strong adoption of the company’s mobile payment solutions.
PayPal continues to ride on partnerships. The company’s ongoing strategic partnership with Visa V provides enhanced consumer choice, point of sale acceptance, instant money-withdrawal facility and data quality. Similarly, PayPal and Mastercard have been working together for 10 years. The firms currently run a multi-year PayPal Extras Mastercard co-branded consumer credit card program. MasterCard is a “clear and equal” payment choice in PayPal’s wallet.
The company’s partnerships with Alphabet GOOGL, Facebook FB, Alibaba and eBay are also helping it add new customers and increase payment volume. Over the past year, the company has placed itself at a potential position for partnerships across multiple original equipment manufacturers (OEM), technology companies, mobile-carriers, retailers and financial institutions. All these are likely to aid the company’s first-quarter results.
Furthermore, PayPal’s mobile payment tools — One Touch and Venmo — are other key growth catalysts. One Touch enables customers to make purchases through a variety of merchant websites or apps without providing additional information. At the end of the prior quarter, the service was in use by more than 8 million merchants and 80 million consumers.
The company’s other platform — Venmo — enables users to transfer money between family and friends via mobile devices. Venmo users can pay at more than 2 million PayPal merchants across the United States. In the fourth quarter of 2017, Venmo generated $10.4 billion of payment volume, marking impressive year-over-year growth of 86%.
Will You Make a Fortune on the Shift to Electric Cars?
Here’s another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It’s not the one you think.
See This Ticker Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Facebook, Inc. (FB): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Visa Inc. (V): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research