Intrinsic value of PayPal Holdings - PYPL

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$54.33

  Intrinsic Value

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  Value-price divergence*

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$54.33

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PYPL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 64.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  17.24
  16.60
  15.44
  14.40
  13.46
  12.61
  11.85
  11.16
  10.55
  9.99
  9.49
  9.04
  8.64
  8.28
  7.95
  7.65
  7.39
  7.15
  6.93
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.67
  5.61
  5.55
Revenue, $m
  10,842
  12,642
  14,594
  16,695
  18,941
  21,330
  23,857
  26,521
  29,318
  32,248
  35,310
  38,503
  41,830
  45,292
  48,892
  52,634
  56,523
  60,564
  64,764
  69,130
  73,670
  78,392
  83,307
  88,424
  93,754
  99,309
  105,102
  111,144
  117,451
  124,037
  130,916
Variable operating expenses, $m
 
  10,577
  12,147
  13,838
  15,645
  17,567
  19,600
  21,743
  23,994
  26,352
  28,815
  30,978
  33,655
  36,440
  39,337
  42,348
  45,476
  48,728
  52,107
  55,619
  59,272
  63,071
  67,025
  71,142
  75,431
  79,900
  84,561
  89,423
  94,497
  99,795
  105,330
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,256
  10,577
  12,147
  13,838
  15,645
  17,567
  19,600
  21,743
  23,994
  26,352
  28,815
  30,978
  33,655
  36,440
  39,337
  42,348
  45,476
  48,728
  52,107
  55,619
  59,272
  63,071
  67,025
  71,142
  75,431
  79,900
  84,561
  89,423
  94,497
  99,795
  105,330
Operating income, $m
  1,586
  2,065
  2,446
  2,857
  3,296
  3,763
  4,257
  4,777
  5,324
  5,897
  6,495
  7,525
  8,175
  8,852
  9,555
  10,287
  11,047
  11,837
  12,657
  13,511
  14,398
  15,321
  16,281
  17,281
  18,323
  19,409
  20,541
  21,722
  22,954
  24,241
  25,586
EBITDA, $m
  2,310
  2,719
  3,139
  3,590
  4,074
  4,587
  5,131
  5,704
  6,305
  6,935
  7,594
  8,281
  8,996
  9,741
  10,515
  11,320
  12,156
  13,025
  13,928
  14,867
  15,844
  16,859
  17,916
  19,017
  20,163
  21,358
  22,603
  23,903
  25,259
  26,676
  28,155
Interest expense (income), $m
  4
  0
  108
  224
  349
  482
  624
  775
  933
  1,099
  1,274
  1,456
  1,646
  1,843
  2,049
  2,263
  2,486
  2,717
  2,957
  3,207
  3,466
  3,736
  4,017
  4,309
  4,614
  4,930
  5,261
  5,605
  5,964
  6,339
  6,731
Earnings before tax, $m
  1,631
  2,065
  2,338
  2,633
  2,947
  3,280
  3,632
  4,003
  4,391
  4,797
  5,221
  6,069
  6,530
  7,008
  7,506
  8,024
  8,561
  9,120
  9,700
  10,304
  10,931
  11,584
  12,264
  12,972
  13,710
  14,478
  15,280
  16,117
  16,990
  17,902
  18,855
Tax expense, $m
  230
  557
  631
  711
  796
  886
  981
  1,081
  1,186
  1,295
  1,410
  1,639
  1,763
  1,892
  2,027
  2,166
  2,311
  2,462
  2,619
  2,782
  2,951
  3,128
  3,311
  3,502
  3,702
  3,909
  4,126
  4,352
  4,587
  4,834
  5,091
Net income, $m
  1,401
  1,507
  1,707
  1,922
  2,151
  2,395
  2,652
  2,922
  3,205
  3,502
  3,812
  4,431
  4,767
  5,116
  5,480
  5,857
  6,250
  6,657
  7,081
  7,522
  7,980
  8,457
  8,953
  9,470
  10,008
  10,569
  11,154
  11,765
  12,403
  13,069
  13,764

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,975
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  33,103
  32,836
  37,906
  43,363
  49,198
  55,402
  61,967
  68,885
  76,151
  83,761
  91,714
  100,009
  108,650
  117,642
  126,993
  136,712
  146,813
  157,310
  168,218
  179,558
  191,350
  203,616
  216,381
  229,672
  243,517
  257,946
  272,991
  288,687
  305,068
  322,174
  340,043
Adjusted assets (=assets-cash), $m
  28,128
  32,836
  37,906
  43,363
  49,198
  55,402
  61,967
  68,885
  76,151
  83,761
  91,714
  100,009
  108,650
  117,642
  126,993
  136,712
  146,813
  157,310
  168,218
  179,558
  191,350
  203,616
  216,381
  229,672
  243,517
  257,946
  272,991
  288,687
  305,068
  322,174
  340,043
Revenue / Adjusted assets
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
Average production assets, $m
  1,698
  1,985
  2,291
  2,621
  2,974
  3,349
  3,746
  4,164
  4,603
  5,063
  5,544
  6,045
  6,567
  7,111
  7,676
  8,264
  8,874
  9,509
  10,168
  10,853
  11,566
  12,308
  13,079
  13,883
  14,719
  15,592
  16,501
  17,450
  18,440
  19,474
  20,554
Working capital, $m
  8,855
  4,526
  5,225
  5,977
  6,781
  7,636
  8,541
  9,494
  10,496
  11,545
  12,641
  13,784
  14,975
  16,215
  17,503
  18,843
  20,235
  21,682
  23,186
  24,748
  26,374
  28,064
  29,824
  31,656
  33,564
  35,553
  37,626
  39,790
  42,048
  44,405
  46,868
Total debt, $m
  0
  3,084
  6,399
  9,968
  13,784
  17,842
  22,135
  26,660
  31,412
  36,389
  41,590
  47,015
  52,666
  58,547
  64,662
  71,019
  77,625
  84,489
  91,624
  99,040
  106,752
  114,774
  123,122
  131,814
  140,869
  150,305
  160,145
  170,410
  181,124
  192,311
  203,997
Total liabilities, $m
  18,391
  21,475
  24,790
  28,359
  32,175
  36,233
  40,526
  45,051
  49,803
  54,780
  59,981
  65,406
  71,057
  76,938
  83,053
  89,410
  96,016
  102,880
  110,015
  117,431
  125,143
  133,165
  141,513
  150,205
  159,260
  168,696
  178,536
  188,801
  199,515
  210,702
  222,388
Total equity, $m
  14,712
  11,361
  13,115
  15,003
  17,022
  19,169
  21,440
  23,834
  26,348
  28,981
  31,733
  34,603
  37,593
  40,704
  43,939
  47,302
  50,797
  54,429
  58,204
  62,127
  66,207
  70,451
  74,868
  79,466
  84,257
  89,249
  94,455
  99,886
  105,554
  111,472
  117,655
Total liabilities and equity, $m
  33,103
  32,836
  37,905
  43,362
  49,197
  55,402
  61,966
  68,885
  76,151
  83,761
  91,714
  100,009
  108,650
  117,642
  126,992
  136,712
  146,813
  157,309
  168,219
  179,558
  191,350
  203,616
  216,381
  229,671
  243,517
  257,945
  272,991
  288,687
  305,069
  322,174
  340,043
Debt-to-equity ratio
  0.000
  0.270
  0.490
  0.660
  0.810
  0.930
  1.030
  1.120
  1.190
  1.260
  1.310
  1.360
  1.400
  1.440
  1.470
  1.500
  1.530
  1.550
  1.570
  1.590
  1.610
  1.630
  1.640
  1.660
  1.670
  1.680
  1.700
  1.710
  1.720
  1.730
  1.730
Adjusted equity ratio
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,401
  1,507
  1,707
  1,922
  2,151
  2,395
  2,652
  2,922
  3,205
  3,502
  3,812
  4,431
  4,767
  5,116
  5,480
  5,857
  6,250
  6,657
  7,081
  7,522
  7,980
  8,457
  8,953
  9,470
  10,008
  10,569
  11,154
  11,765
  12,403
  13,069
  13,764
Depreciation, amort., depletion, $m
  724
  654
  692
  734
  778
  824
  874
  926
  981
  1,039
  1,099
  756
  821
  889
  960
  1,033
  1,109
  1,189
  1,271
  1,357
  1,446
  1,538
  1,635
  1,735
  1,840
  1,949
  2,063
  2,181
  2,305
  2,434
  2,569
Funds from operations, $m
  2,677
  2,161
  2,399
  2,656
  2,929
  3,219
  3,526
  3,848
  4,187
  4,541
  4,910
  5,186
  5,588
  6,005
  6,439
  6,890
  7,359
  7,846
  8,352
  8,878
  9,426
  9,995
  10,588
  11,205
  11,848
  12,518
  13,217
  13,946
  14,708
  15,503
  16,333
Change in working capital, $m
  -481
  644
  699
  752
  804
  855
  905
  954
  1,001
  1,049
  1,096
  1,143
  1,191
  1,239
  1,289
  1,340
  1,392
  1,447
  1,504
  1,563
  1,625
  1,691
  1,759
  1,832
  1,908
  1,989
  2,074
  2,163
  2,258
  2,358
  2,463
Cash from operations, $m
  3,158
  1,512
  1,701
  1,903
  2,125
  2,364
  2,621
  2,895
  3,185
  3,492
  3,814
  4,043
  4,397
  4,766
  5,150
  5,550
  5,967
  6,399
  6,849
  7,315
  7,800
  8,304
  8,828
  9,373
  9,940
  10,529
  11,143
  11,783
  12,450
  13,145
  13,871
Maintenance CAPEX, $m
  0
  -212
  -248
  -286
  -328
  -372
  -419
  -468
  -520
  -575
  -633
  -693
  -756
  -821
  -889
  -960
  -1,033
  -1,109
  -1,189
  -1,271
  -1,357
  -1,446
  -1,538
  -1,635
  -1,735
  -1,840
  -1,949
  -2,063
  -2,181
  -2,305
  -2,434
New CAPEX, $m
  -669
  -287
  -306
  -330
  -353
  -375
  -397
  -418
  -439
  -460
  -481
  -501
  -522
  -544
  -565
  -588
  -611
  -634
  -659
  -685
  -713
  -741
  -772
  -803
  -837
  -872
  -909
  -949
  -990
  -1,034
  -1,080
Cash from investing activities, $m
  -4,999
  -499
  -554
  -616
  -681
  -747
  -816
  -886
  -959
  -1,035
  -1,114
  -1,194
  -1,278
  -1,365
  -1,454
  -1,548
  -1,644
  -1,743
  -1,848
  -1,956
  -2,070
  -2,187
  -2,310
  -2,438
  -2,572
  -2,712
  -2,858
  -3,012
  -3,171
  -3,339
  -3,514
Free cash flow, $m
  -1,841
  1,013
  1,146
  1,287
  1,444
  1,617
  1,805
  2,008
  2,225
  2,456
  2,701
  2,849
  3,119
  3,401
  3,696
  4,003
  4,323
  4,655
  5,001
  5,359
  5,731
  6,117
  6,518
  6,935
  7,367
  7,817
  8,285
  8,772
  9,278
  9,806
  10,356
Issuance/(repayment) of debt, $m
  -21
  3,084
  3,316
  3,569
  3,816
  4,058
  4,293
  4,525
  4,752
  4,977
  5,201
  5,425
  5,651
  5,881
  6,115
  6,357
  6,606
  6,865
  7,134
  7,416
  7,712
  8,022
  8,348
  8,692
  9,055
  9,437
  9,840
  10,265
  10,714
  11,187
  11,686
Issuance/(repurchase) of shares, $m
  -886
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,038
  3,084
  3,316
  3,569
  3,816
  4,058
  4,293
  4,525
  4,752
  4,977
  5,201
  5,425
  5,651
  5,881
  6,115
  6,357
  6,606
  6,865
  7,134
  7,416
  7,712
  8,022
  8,348
  8,692
  9,055
  9,437
  9,840
  10,265
  10,714
  11,187
  11,686
Total cash flow (excl. dividends), $m
  197
  4,097
  4,462
  4,856
  5,260
  5,675
  6,099
  6,533
  6,978
  7,433
  7,902
  8,274
  8,770
  9,282
  9,812
  10,360
  10,929
  11,520
  12,135
  12,775
  13,443
  14,139
  14,867
  15,627
  16,422
  17,254
  18,125
  19,037
  19,992
  20,993
  22,043
Retained Cash Flow (-), $m
  -953
  -1,624
  -1,754
  -1,888
  -2,019
  -2,147
  -2,271
  -2,394
  -2,514
  -2,633
  -2,752
  -2,870
  -2,990
  -3,111
  -3,235
  -3,363
  -3,495
  -3,632
  -3,774
  -3,924
  -4,080
  -4,244
  -4,417
  -4,599
  -4,790
  -4,992
  -5,206
  -5,431
  -5,668
  -5,918
  -6,183
Prev. year cash balance distribution, $m
 
  4,975
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,447
  2,707
  2,968
  3,242
  3,528
  3,827
  4,139
  4,463
  4,800
  5,150
  5,404
  5,780
  6,171
  6,576
  6,997
  7,434
  7,888
  8,361
  8,852
  9,363
  9,895
  10,450
  11,028
  11,632
  12,261
  12,919
  13,606
  14,324
  15,075
  15,860
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  7,140
  2,479
  2,583
  2,669
  2,735
  2,778
  2,796
  2,790
  2,758
  2,700
  2,566
  2,467
  2,346
  2,208
  2,054
  1,889
  1,716
  1,540
  1,363
  1,190
  1,023
  867
  723
  592
  477
  377
  292
  222
  165
  119
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

PayPal Holdings, Inc. operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. It enables businesses of various sizes to accept payments from merchant Websites, mobile devices, and applications, as well as at offline retail locations through a range of payment solutions, including PayPal, PayPal Credit, Braintree, Venmo, Xoom, and Paydiant products. The company's platform allows consumers to shop by sending payments, withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies. PayPal Holdings, Inc. was founded in 1998 and is headquartered in San Jose, California.

FINANCIAL RATIOS  of  PayPal Holdings (PYPL)

Valuation Ratios
P/E Ratio 46.8
Price to Sales 6
Price to Book 4.5
Price to Tangible Book
Price to Cash Flow 20.8
Price to Free Cash Flow 26.3
Growth Rates
Sales Growth Rate 17.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.3%
Cap. Spend. - 3 Yr. Gr. Rate 11.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 409
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 9.8%
Ret/ On T. Cap. - 3 Yr. Avg. 8.4%
Return On Equity 9.8%
Return On Equity - 3 Yr. Avg. 8.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 47.4%
Gross Margin - 3 Yr. Avg. 50.3%
EBITDA Margin 21.8%
EBITDA Margin - 3 Yr. Avg. 22.3%
Operating Margin 14.6%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 15%
Pre-Tax Margin - 3 Yr. Avg. 15.6%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 10.5%
Effective Tax Rate 14.1%
Eff/ Tax Rate - 3 Yr. Avg. 32.8%
Payout Ratio 0%

PYPL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PYPL stock intrinsic value calculation we used $10842 million for the last fiscal year's total revenue generated by PayPal Holdings. The default revenue input number comes from 2016 income statement of PayPal Holdings. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PYPL stock valuation model: a) initial revenue growth rate of 16.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PYPL is calculated based on our internal credit rating of PayPal Holdings, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of PayPal Holdings.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PYPL stock the variable cost ratio is equal to 84.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PYPL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for PayPal Holdings.

Corporate tax rate of 27% is the nominal tax rate for PayPal Holdings. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PYPL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PYPL are equal to 15.7%.

Life of production assets of 8 years is the average useful life of capital assets used in PayPal Holdings operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PYPL is equal to 35.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $14712 million for PayPal Holdings - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1189.49 million for PayPal Holdings is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of PayPal Holdings at the current share price and the inputted number of shares is $64.6 billion.


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COMPANY NEWS

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▶ Why the PayPal Rally Has Room to Run   [11:34AM  Barrons.com]
▶ PayPal Worries Over Apple Overblown, New Deals Help: Analyst   [04:12PM  Investor's Business Daily]
▶ PayPal Still Has Growth Potential   [Jun-20-17 04:33PM  GuruFocus.com]
▶ Should You Venmo Your Wedding Gift?   [03:33PM  TheStreet.com]
▶ PayPal Isn't Worried About P2P Apple Pay   [Jun-19-17 07:59PM  Motley Fool]
▶ Apple P2P Payments Aren't a Threat to PayPal or Square   [Jun-17-17 12:00PM  Motley Fool]
▶ Whats PayPals Valuation?   [07:36AM  Market Realist]
▶ Why Would Snap Integrate PayPal Into Snapchat?   [Jun-15-17 05:02PM  Motley Fool]
▶ Why PayPal Sees a Huge Opportunity in Canada   [10:36AM  Market Realist]
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▶ Why eBay Might Need a Native Credit Service   [09:06AM  Market Realist]
▶ Whats behind the Snap-PayPal Partnership?   [07:36AM  Market Realist]
▶ PayPal Isnt Excited about This Partnership   [12:05PM  Market Realist]
▶ How PayPal Views P2P Competition from Apple   [10:38AM  Market Realist]
▶ Why eBays UK Sellers Pay a 20% Tax   [10:36AM  Market Realist]
▶ Should PayPal Exit Consumer Lending Space?   [08:41AM  Market Realist]
▶ Why The Fed Should Sit On Their Hands Tomorrow   [Jun-13-17 09:32PM  Forbes]
▶ PayPal Holdings, Inc., Payment Techs Growth Opportunity   [Jun-12-17 03:40PM  Investopedia]
▶ Why Wall Street Is Optimistic about PayPal   [10:36AM  Market Realist]
▶ We Deliver: AMD, PYPL & more   [Jun-09-17 02:31PM  CNBC Videos]
▶ 3 Companies That Could Lose to Apple in P2P Payments   [Jun-06-17 02:05PM  Motley Fool]
▶ Look Out Venmo, Here Comes Apple   [04:36PM  Barrons.com]
▶ Here's Why the Best Is Yet to Come for PayPal   [Jun-01-17 05:05PM  Motley Fool]
▶ 3 Hot Stocks to Buy in May   [May-31-17 06:28PM  Motley Fool]
▶ Better Buy: Shopify vs. PayPal   [11:18AM  Motley Fool]
▶ Is The PBOC Stopping The Music On Bitcoin?   [May-28-17 08:58PM  Forbes]
▶ Big-Cap Growth Fund, Up 15% In 2017, Recently Bought 3 IBD 50 Stocks   [May-26-17 08:05AM  Investor's Business Daily]
▶ Is Bitcoin A Bubble?   [May-25-17 06:22PM  Forbes]
▶ Who's Behind The Spike In Bitcoin?   [May-24-17 10:11PM  Forbes]
▶ [$$] PayPal Fueled by Innovation   [12:38PM  Barrons.com]
▶ How PayPal and Square Can Thrive Abroad   [01:36PM  Barrons.com]
▶ Pandora's Latest Problem Starts With the Letter P   [May-22-17 03:03PM  Barrons.com]
▶ Just What Pandora Needs: A Lawsuit Over Its Logo   [May-21-17 09:45AM  24/7 Wall St.]
▶ Better Buy: eBay Inc. vs. PayPal   [May-19-17 11:37AM  Motley Fool]
▶ Why Mobile Wallets Are a Rare Struggle for Apple   [May-18-17 05:39PM  Barrons.com]
▶ PayPal now lets you pay online with a fingerprint scan   [May-17-17 07:05PM  Yahoo Finance]
▶ LendingClub looks to former Paypal exec at it eyes consumer credit   [12:08PM  American City Business Journals]
▶ Wall Street analysts are nailing it this year   [May-16-17 04:28PM  CNBC]
▶ Why PayPal Holdings Popped Nearly 12% in April   [May-13-17 05:07PM  Motley Fool]
▶ Better Buy: PayPal Holdings vs Shopify   [May-11-17 05:05PM  Motley Fool]
Stock chart of PYPL Financial statements of PYPL Annual reports of PYPL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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