Industry Comparison: Evaluating PayPal Holdings Against Competitors In Financial Services Industry

In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating PayPal Holdings PYPL vis-à-vis its key competitors in the Financial Services industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in the industry.

PayPal Holdings Background

PayPal was spun off from eBay in 2015 and provides electronic payment solutions to merchants and consumers, with a focus on online transactions. The company had 435 million active accounts at the end of 2022. The company also owns Venmo, a person-to-person payment platform.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
PayPal Holdings Inc 18.13 3.32 2.34 5.18% $1.6 $3.37 8.36%
Visa Inc 31.41 14.10 16.93 12.05% $6.07 $6.91 10.56%
Mastercard Inc 38.08 64.93 17.07 54.13% $4.12 $4.96 13.5%
Fiserv Inc 29.49 2.85 4.67 3.2% $2.25 $2.98 7.86%
Global Payments Inc 40.05 1.52 3.64 1.62% $1.05 $1.56 8.33%
Fleetcor Technologies Inc 23.03 6.93 5.92 8.59% $0.54 $0.76 8.72%
Jack Henry & Associates Inc 34 7.38 5.80 6.22% $0.19 $0.25 7.97%
WEX Inc 33.45 5.20 3.59 1.06% $0.15 $0.42 5.73%
StoneCo Ltd 28.14 1.97 2.55 2.94% $0.9 $2.18 25.35%
DLocal Ltd 37.91 11.47 9.10 9.84% $0.1 $0.07 46.54%
Euronet Worldwide Inc 18.41 4 1.45 8.25% $0.2 $0.43 7.81%
The Western Union Co 6.35 7.42 1.07 27.58% $0.28 $0.41 0.75%
Shift4 Payments Inc 43.28 10.71 2 8.62% $0.11 $0.18 23.41%
PagSeguro Digital Ltd 13.45 1.61 2.38 3.23% $1.68 $0.24 -0.99%
Evertec Inc 26.74 4.99 4.01 1.88% $0.03 $0.09 18.79%
Paymentus Holdings Inc 150.57 4.72 3.40 1.54% $0.01 $0.05 18.94%
Payoneer Global Inc 31.87 2.71 2.31 2.03% $0.04 $0.18 30.91%
Average 36.64 9.53 5.37 9.55% $1.11 $1.35 14.64%

By conducting a comprehensive analysis of PayPal Holdings, the following trends become evident:

  • At 18.13, the stock's Price to Earnings ratio is 0.49x less than the industry average, suggesting favorable growth potential.

  • The current Price to Book ratio of 3.32, which is 0.35x the industry average, is substantially lower than the industry average, indicating potential undervaluation.

  • Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 2.34, which is 0.44x the industry average.

  • The company has a lower Return on Equity (ROE) of 5.18%, which is 4.37% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

  • The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.6 Billion, which is 1.44x above the industry average, implying stronger profitability and robust cash flow generation.

  • Compared to its industry, the company has higher gross profit of $3.37 Billion, which indicates 2.5x above the industry average, indicating stronger profitability and higher earnings from its core operations.

  • The company's revenue growth of 8.36% is significantly below the industry average of 14.64%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

By analyzing PayPal Holdings in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

  • Compared to its top 4 peers, PayPal Holdings has a stronger financial position indicated by its lower debt-to-equity ratio of 0.54.

  • This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.

Key Takeaways

PayPal Holdings has a low PE ratio, indicating that its stock price is relatively low compared to its earnings. The low PB ratio suggests that the company's stock is undervalued based on its book value. The low PS ratio indicates that the stock is trading at a lower price relative to its sales. On the other hand, PayPal's low ROE suggests that the company is not generating significant returns on its shareholders' equity. The high EBITDA and gross profit indicate strong profitability, while the low revenue growth suggests limited expansion opportunities.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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