July 4, 2024
Top 10 Stock PayPal Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: PayPal – Top 10 Stock in NASDAQ 100 Index
PayPal is listed as a top 10 stock on July 04, 2024 in the market index NASDAQ 100 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 35 (35% performer), Obermatt assesses an overall hold recommendation for PayPal on July 04, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Data Processing & Outsourcing |
| Index | Employee Focus US, Diversity USA, Human Rights, Renewables Users, NASDAQ 100, NASDAQ, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View PayPal Hold
| 360 METRICS | July 4, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 40 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| SENTIMENT | ||||||||
| SENTIMENT | 81 |
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| 360° VIEW | ||||||||
| 360° VIEW | 35 |
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ANALYSIS: With an Obermatt 360° View of 35 (better than 35% compared with alternatives), overall professional sentiment and financial characteristics for the stock PayPal are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for PayPal. The consolidated Sentiment Rank has a good rank of 81, which means that professional investors are more optimistic about the stock than for 81% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 65 or better than 65% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 40, meaning that the share price of PayPal is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 7. ...read more
RECOMMENDATION: With a consolidated 360° View of 35, PayPal is worse than 65% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 81) and safe financing practices (Safety Rank of 65), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of PayPaḷ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for PayPal very positive
ANALYSIS: With an Obermatt Sentiment Rank of 81 (better than 81% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock PayPal is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for PayPal. Analyst Opinions are at a rank of 28 (worse than 72% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 72, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in PayPal. Even better, the Professional Investors rank is 94, meaning that professional investors hold more stock in this company than in 94% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 56, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 56% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 81 (more positive than 81% compared with investment alternatives), PayPal has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: PayPal Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 40 (worse than 60% compared with alternatives), PayPal shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for PayPal. Price-to-Sales (P/S) is 55, which means that the stock price compared with what market professionals expect for future sales is lower than for 55% of comparable companies, indicating a good value regarding PayPal's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than for 57% of alternatives, and it's also true for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 56. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 1% of all competitors have even lower dividend yields than PayPal (a Dividend Yield Rank of 1). 99% alternative investments in the same business provide a higher dividend yield. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 40, is a hold recommendation based on PayPal's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. ...read more
Growth Strategy: PayPal Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 7 (better than 7% compared with alternatives), PayPal shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for PayPal. Sales Growth has a rank of 43, which means that currently professionals expect the company to grow less than 57% of its competitors. The same is valid for Profit Growth, with a rank of 9, and Capital Growth with 9. In addition, Stock Returns have a below market rank of 29, which means that the stock returns have recently been below 71% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 7, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: PayPal Debt Financing Safety above-average
| SAFETY METRICS | July 4, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 72 |
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| REFINANCING | ||||||||
| REFINANCING | 70 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 29 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
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ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company PayPal has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of PayPal is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators where two out of three are above average for PayPal.Leverage is at 72, meaning the company has a below-average debt-to-equity ratio. It has less debt than 72% of its competitors.Refinancing is at a rank of 70, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 70% of its competitors. Liquidity is at 29, meaning that the company generates less profit to service its debt than 71% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), PayPal has a financing structure that is safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more
Combined financial peformance: PayPal Below-Average Financial Performance
| COMBINED PERFORMANCE | July 4, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 40 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 29 |
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| COMBINED | ||||||||
| COMBINED | 25 |
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ANALYSIS: With an Obermatt Combined Rank of 25 (worse than 75% compared with investment alternatives), PayPal (Data Processing & Outsourcing, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of PayPal are low in value (priced high) with a consolidated Value Rank of 40 (worse than 60% of alternatives) and show below-average growth (Growth Rank of 7) but are safely financed (Safety Rank of 65), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 25, is a hold recommendation based on PayPal's financial characteristics. As the company PayPal's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 40) and low growth (Obermatt Growth Rank of 7), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 65) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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