Yahoo Finance Earnings Beat: PayPal Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
It's been a pretty great week for PayPal Holdings, Inc. (NASDAQ:PYPL) shareholders, with its shares surging 15% to US$65.78 in the week since its latest quarterly results. Revenues were US$7.9b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.08, an impressive 25% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for PayPal Holdings
After the latest results, the 42 analysts covering PayPal Holdings are now predicting revenues of US$31.9b in 2024. If met, this would reflect a reasonable 2.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to decrease 9.0% to US$3.95 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$32.1b and earnings per share (EPS) of US$3.74 in 2024. So the consensus seems to have become somewhat more optimistic on PayPal Holdings' earnings potential following these results.
The consensus price target was unchanged at US$78.56, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on PayPal Holdings, with the most bullish analyst valuing it at US$145 and the most bearish at US$60.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that PayPal Holdings' revenue growth is expected to slow, with the forecast 6.0% annualised growth rate until the end of 2024 being well below the historical 12% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.3% per year. Even after the forecast slowdown in growth, it seems obvious that PayPal Holdings is also expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around PayPal Holdings' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on PayPal Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple PayPal Holdings analysts - going out to 2026, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
