Paypal (PYPL) Up 10.7% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Paypal (PYPL). Shares have added about 10.7% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. PayPal Q3 Earnings Beat Estimates, Revenues Up Y/YPayPal Holdings reported third-quarter 2024 non-GAAP earnings of $1.20 per share, which surpassed the Zacks Consensus Estimate by 11.11% and jumped 22.4% year over year.Net revenues of $7.847 billion increased 6% year-over-year, both on a forex-neutral basis and reported basis. However, the figure lagged the consensus mark by 0.20%.Transaction margin of $3.7 billion grew more than 8% on a reported basis and more than 6% ex-interest on customer balances, driven by higher interest income, branded checkout, Venmo, Braintree, and tech-led risk/loss improvements.PYPL’s Revenues Ride on Strong Payment VolumeThe total payment volume was $422.641 billion for the reported quarter, up 9% year over year, both on a spot-rate basis and forex-neutral basis. The reported figure beat the Zacks Consensus Estimate by 0.31%.Transaction revenues were $7.067 billion (90.1% of net revenues), up 6.2% year over year. Value-Added Services revenues were $780 million (9.9% of net revenues), up 2.1% year over year.Revenues from the United States totaled $4.518 billion (58% of net revenues), up 6% on a year-over-year basis. International revenues were $3.329 billion (42% of net revenues), up 5% year over year on a reported basis and 6% on a forex-neutral basis.PayPal witnessed year-over-year growth of 1% in total active accounts to 432 million in the reported quarter. The figure topped the Zacks Consensus Estimate by 0.48%.The total number of payment transactions was 6.631 billion, up 6% on a year-over-year basis. The figure missed the consensus mark by 4.22%.PYPL’s payment transactions per active account were 61.4 million, up 9% year over year.PayPal’s operating expenses were $6.456 billion in the third quarter, up 3.3% year over year. As a percentage of net revenues, the figure declined 200 basis points (bps) on a year-over-year basis to 82.3%.Transaction expense rate was 0.91% in the reported quarter compared with 0.93% reported in the year-ago quarter.Transaction margin improved 120 bps to 46.6%.The non-GAAP operating margin expanded 200 bps on a year-over-year basis to 19%.PYPL’s Balance Sheet Remains StrongAs of Sept. 30, 2024, cash, cash equivalents and investments (including long-term) were $16.2 billion. The long-term debt balance was $9.976 billion.PYPL generated $1.614 billion in cash from operations, while free cash flow was $1.54 billion in the third quarter.It returned $1.8 billion to shareholders through share repurchases.PayPal Raises FY24 Earnings GuidanceFor 2024, PayPal now anticipates non-GAAP earnings to see high teens growth (up from previous guidance of low to mid-teens growth) over 2023.PayPal expects transaction margin dollar growth in the mid-single-digits for 2024.For the fourth quarter of 2024, PayPal expects low-single-digit revenue growth.Non-GAAP earnings is expected to exhibit low to mid-single-digit decrease on a year-over-year basis.How Have Estimates Been Moving Since Then?It turns out, fresh estimates flatlined during the past month.VGM ScoresCurrently, Paypal has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookPaypal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerPaypal belongs to the Zacks Internet - Software industry. Another stock from the same industry, F5 Networks (FFIV), has gained 4.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.F5 reported revenues of $746.67 million in the last reported quarter, representing a year-over-year change of +5.6%. EPS of $3.67 for the same period compares with $3.50 a year ago.F5 is expected to post earnings of $3.37 per share for the current quarter, representing a year-over-year change of -1.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for F5. Also, the stock has a VGM Score of C.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.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 PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report F5, Inc. 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