PayPal Stock Before Q4 Earnings: Smart Buy or Risky Move?

PayPal PYPL is set to report its fourth-quarter 2024 results on Feb. 4.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.PYPL expects low-single-digit growth in revenues on a year-over-year basis for the to-be-reported quarter. Non-GAAP earnings are expected to exhibit a low to mid-single-digit decrease on a year-over-year basis.The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $8.23 billion, indicating an increase of 2.52% from the year-ago quarter’s reported figure. PayPal Holdings, Inc. Price and EPS Surprise PayPal Holdings, Inc. price-eps-surprise | PayPal Holdings, Inc. Quote The consensus mark for earnings stands at $1.13 per share, up a couple of cents over the past 30 days, suggesting a decline of 23.65% from the figure reported in the year-ago quarter.PayPal’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 15.14%.Let’s see how things have shaped up for the upcoming announcement.Strong Portfolio, Rich Partner Base to Aid PYPL’s Q4 ResultsPYPL’s fourth-quarter results are expected to reflect portfolio strength. The unveiling of Fastlane, which enhances the guest checkout experience by allowing users to complete their purchase in one click, remains noteworthy. Since its August launch, more than 1,000 merchants have been using Fastlane to provide a seamless experience to their customers and drive increased conversion.Strong monetization efforts of Venmo are likely to have aided Total Payments Volume in the to-be-reported quarter.PYPL’s rich partner base, which includes Amazon AMZN, Shopify SHOP, Apple, Alphabet and Meta Platforms META, has been a key catalyst. The integration of PayPal and Venmo credit or debit cards into Apple Wallet has been a noteworthy development.PayPal is now an additional processor for Shopify Payments in the United States. Its branded checkout solutions are now integrated into Shopify Payments. This creates a single and unified experience for business owners to drive operational efficiency.PayPal’s partnership with Amazon now brings PayPal Checkout to SMBs offering Buy with Prime. Its collaboration with Apple and Google to integrate the Venmo debit card with Apple Pay and Google Pay has been a noteworthy development.PayPal is a top payment method for advertisers and consumers globally across Meta Platforms’ family of apps. Creators and developers are using Hyperwallet. META also uses Braintree for credit card processing.PYPL Shares Outperform Sector, IndustryPaypal shares have appreciated 44.3% in the trailing 12 months, outperforming the Zacks Computer & Technology sector’s return of 28% and the Zacks Internet Software Industry’s 40.4%.PYPL Stock’s Performance Image Source: Zacks Investment Research PayPal stock is cheap, as suggested by the Value Score of B.In terms of the forward 12-month Price/Sales ratio, PYPL is trading at 2.69X, lower than the industry’s 3.22X.Price/Sales (P/S) Ratio Image Source: Zacks Investment Research PayPal Benefits From Expanding PortfolioPayPal presents a compelling investment opportunity as a major player in the global digital payments industry. Its strong brand, innovative technology and ability to adapt to market trends are positives.Its two-sided platform, which helps develop direct financial relationships with customers and merchants, is expected to strengthen its market position.The launch of PayPal Complete Payments in new geographies, including China and Hong Kong, expands its footprint among small and medium-sized businesses (SMBs). PayPal expects to expand its service to more markets in 2025.PayPal’s rich partner base is a key catalyst. In 2025, it will give Amazon Prime members the option to link their Amazon and PayPal accounts so that consumers can receive Prime shipping benefits when they use PayPal while shopping with Buy with Prime.Since the launch of PayPal Everywhere, the company has added more than 1 million first-time debit card users. The company plans to expand the PayPal Everywhere service to Europe in 2025.PYPL - Buy, Sell or Hold?PayPal rides on growing demand for peer-to-peer payments and digital wallets. Hence, investors who already own the stock may expect PYPL's growth prospects to be rewarding over the long term.However, PYPL’s near-term prospects are full of challenges due to challenging macroeconomic conditions, unfavorable forex and sluggish consumer spending.PYPL expects lower volume and revenue growth in the fourth quarter of 2024 and through 2025 from its Braintree products and services. Higher non-transaction operating expenses due to marketing spending are expected to hurt profits in the fourth quarter of 2024. Non-transaction operating expenses for 2024 are now expected to increase in the low-single-digit range. The trend is likely to continue in 2025.Modest growth prospects make PayPal a risky bet for investors, as indicated by a Growth Score of C.PayPal currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 Amazon.com, Inc. (AMZN): Free Stock Analysis Report PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report Shopify Inc. (SHOP): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks