Intrinsic value of PayPal Holdings - PYPL

Previous Close

$70.97

  Intrinsic Value

$50.82

stock screener

  Rating & Target

sell

-28%

  Value-price divergence*

-29%

Previous close

$70.97

 
Intrinsic value

$50.82

 
Up/down potential

-28%

 
Rating

sell

 
Value-price divergence*

-29%

*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 85.3

 

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
  18.30
  16.97
  15.77
  14.70
  13.73
  12.85
  12.07
  11.36
  10.73
  10.15
  9.64
  9.17
  8.76
  8.38
  8.04
  7.74
  7.46
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.95
  5.86
  5.77
  5.70
  5.63
Revenue, $m
  10,842
  12,826
  15,003
  17,369
  19,922
  22,656
  25,568
  28,654
  31,909
  35,331
  38,919
  42,669
  46,584
  50,663
  54,909
  59,325
  63,915
  68,686
  73,644
  78,797
  84,152
  89,720
  95,512
  101,539
  107,812
  114,347
  121,156
  128,255
  135,660
  143,387
  151,454
Variable operating expenses, $m
 
  10,725
  12,476
  14,380
  16,434
  18,634
  20,977
  23,460
  26,079
  28,832
  31,718
  34,330
  37,479
  40,761
  44,177
  47,730
  51,424
  55,262
  59,251
  63,397
  67,706
  72,186
  76,845
  81,694
  86,742
  91,999
  97,478
  103,189
  109,147
  115,364
  121,854
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
  10,725
  12,476
  14,380
  16,434
  18,634
  20,977
  23,460
  26,079
  28,832
  31,718
  34,330
  37,479
  40,761
  44,177
  47,730
  51,424
  55,262
  59,251
  63,397
  67,706
  72,186
  76,845
  81,694
  86,742
  91,999
  97,478
  103,189
  109,147
  115,364
  121,854
Operating income, $m
  1,586
  2,101
  2,526
  2,989
  3,488
  4,022
  4,591
  5,194
  5,830
  6,499
  7,200
  8,339
  9,104
  9,901
  10,731
  11,594
  12,491
  13,424
  14,393
  15,400
  16,446
  17,535
  18,667
  19,844
  21,071
  22,348
  23,678
  25,066
  26,513
  28,023
  29,600
EBITDA, $m
  2,310
  2,758
  3,227
  3,735
  4,284
  4,872
  5,499
  6,162
  6,862
  7,598
  8,370
  9,177
  10,018
  10,896
  11,809
  12,759
  13,746
  14,772
  15,838
  16,946
  18,098
  19,296
  20,541
  21,837
  23,186
  24,592
  26,056
  27,583
  29,175
  30,837
  32,572
Interest expense (income), $m
  4
  0
  119
  248
  389
  541
  703
  876
  1,060
  1,253
  1,457
  1,670
  1,893
  2,126
  2,368
  2,621
  2,883
  3,156
  3,440
  3,735
  4,041
  4,360
  4,691
  5,035
  5,393
  5,766
  6,155
  6,560
  6,982
  7,422
  7,881
Earnings before tax, $m
  1,631
  2,101
  2,407
  2,740
  3,099
  3,481
  3,888
  4,318
  4,770
  5,246
  5,743
  6,669
  7,211
  7,775
  8,363
  8,973
  9,608
  10,268
  10,953
  11,665
  12,405
  13,175
  13,976
  14,810
  15,677
  16,581
  17,524
  18,506
  19,531
  20,601
  21,719
Tax expense, $m
  230
  567
  650
  740
  837
  940
  1,050
  1,166
  1,288
  1,416
  1,551
  1,801
  1,947
  2,099
  2,258
  2,423
  2,594
  2,772
  2,957
  3,150
  3,349
  3,557
  3,774
  3,999
  4,233
  4,477
  4,731
  4,997
  5,273
  5,562
  5,864
Net income, $m
  1,401
  1,534
  1,757
  2,000
  2,262
  2,541
  2,838
  3,152
  3,482
  3,829
  4,193
  4,868
  5,264
  5,676
  6,105
  6,551
  7,014
  7,495
  7,996
  8,515
  9,056
  9,618
  10,203
  10,811
  11,444
  12,104
  12,792
  13,510
  14,258
  15,039
  15,855

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
  33,315
  38,968
  45,114
  51,744
  58,847
  66,411
  74,425
  82,881
  91,770
  101,087
  110,829
  120,997
  131,591
  142,620
  154,090
  166,014
  178,406
  191,284
  204,666
  218,577
  233,040
  248,083
  263,737
  280,032
  297,005
  314,691
  333,130
  352,362
  372,433
  393,388
Adjusted assets (=assets-cash), $m
  28,128
  33,315
  38,968
  45,114
  51,744
  58,847
  66,411
  74,425
  82,881
  91,770
  101,087
  110,829
  120,997
  131,591
  142,620
  154,090
  166,014
  178,406
  191,284
  204,666
  218,577
  233,040
  248,083
  263,737
  280,032
  297,005
  314,691
  333,130
  352,362
  372,433
  393,388
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
  2,014
  2,355
  2,727
  3,128
  3,557
  4,014
  4,499
  5,010
  5,547
  6,110
  6,699
  7,314
  7,954
  8,621
  9,314
  10,035
  10,784
  11,562
  12,371
  13,212
  14,086
  14,995
  15,942
  16,927
  17,952
  19,021
  20,136
  21,299
  22,512
  23,778
Working capital, $m
  8,855
  4,592
  5,371
  6,218
  7,132
  8,111
  9,153
  10,258
  11,423
  12,649
  13,933
  15,276
  16,677
  18,137
  19,657
  21,238
  22,882
  24,590
  26,365
  28,209
  30,126
  32,120
  34,193
  36,351
  38,597
  40,936
  43,374
  45,915
  48,566
  51,332
  54,221
Total debt, $m
  0
  3,397
  7,094
  11,114
  15,450
  20,095
  25,042
  30,283
  35,813
  41,627
  47,720
  54,091
  60,741
  67,670
  74,882
  82,384
  90,182
  98,287
  106,708
  115,461
  124,558
  134,017
  143,855
  154,093
  164,750
  175,850
  187,417
  199,476
  212,054
  225,180
  238,885
Total liabilities, $m
  18,391
  21,788
  25,485
  29,505
  33,841
  38,486
  43,433
  48,674
  54,204
  60,018
  66,111
  72,482
  79,132
  86,061
  93,273
  100,775
  108,573
  116,678
  125,099
  133,852
  142,949
  152,408
  162,246
  172,484
  183,141
  194,241
  205,808
  217,867
  230,445
  243,571
  257,276
Total equity, $m
  14,712
  11,527
  13,483
  15,610
  17,904
  20,361
  22,978
  25,751
  28,677
  31,752
  34,976
  38,347
  41,865
  45,531
  49,346
  53,315
  57,441
  61,729
  66,184
  70,815
  75,628
  80,632
  85,837
  91,253
  96,891
  102,764
  108,883
  115,263
  121,917
  128,862
  136,112
Total liabilities and equity, $m
  33,103
  33,315
  38,968
  45,115
  51,745
  58,847
  66,411
  74,425
  82,881
  91,770
  101,087
  110,829
  120,997
  131,592
  142,619
  154,090
  166,014
  178,407
  191,283
  204,667
  218,577
  233,040
  248,083
  263,737
  280,032
  297,005
  314,691
  333,130
  352,362
  372,433
  393,388
Debt-to-equity ratio
  0.000
  0.290
  0.530
  0.710
  0.860
  0.990
  1.090
  1.180
  1.250
  1.310
  1.360
  1.410
  1.450
  1.490
  1.520
  1.550
  1.570
  1.590
  1.610
  1.630
  1.650
  1.660
  1.680
  1.690
  1.700
  1.710
  1.720
  1.730
  1.740
  1.750
  1.760
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
  1,534
  1,757
  2,000
  2,262
  2,541
  2,838
  3,152
  3,482
  3,829
  4,193
  4,868
  5,264
  5,676
  6,105
  6,551
  7,014
  7,495
  7,996
  8,515
  9,056
  9,618
  10,203
  10,811
  11,444
  12,104
  12,792
  13,510
  14,258
  15,039
  15,855
Depreciation, amort., depletion, $m
  724
  658
  700
  747
  797
  851
  908
  968
  1,032
  1,099
  1,170
  837
  914
  994
  1,078
  1,164
  1,254
  1,348
  1,445
  1,546
  1,651
  1,761
  1,874
  1,993
  2,116
  2,244
  2,378
  2,517
  2,662
  2,814
  2,972
Funds from operations, $m
  2,677
  2,191
  2,458
  2,747
  3,059
  3,392
  3,746
  4,120
  4,515
  4,929
  5,362
  5,706
  6,178
  6,670
  7,182
  7,715
  8,268
  8,843
  9,441
  10,062
  10,707
  11,379
  12,077
  12,804
  13,560
  14,349
  15,170
  16,027
  16,920
  17,853
  18,827
Change in working capital, $m
  -481
  710
  779
  847
  914
  979
  1,043
  1,105
  1,165
  1,225
  1,284
  1,343
  1,401
  1,460
  1,520
  1,581
  1,643
  1,708
  1,775
  1,845
  1,917
  1,993
  2,073
  2,158
  2,246
  2,339
  2,438
  2,541
  2,651
  2,766
  2,888
Cash from operations, $m
  3,158
  1,481
  1,678
  1,900
  2,145
  2,413
  2,703
  3,015
  3,349
  3,703
  4,078
  4,363
  4,777
  5,210
  5,662
  6,134
  6,625
  7,135
  7,666
  8,217
  8,790
  9,385
  10,004
  10,646
  11,314
  12,009
  12,732
  13,485
  14,269
  15,087
  15,939
Maintenance CAPEX, $m
  0
  -212
  -252
  -294
  -341
  -391
  -445
  -502
  -562
  -626
  -693
  -764
  -837
  -914
  -994
  -1,078
  -1,164
  -1,254
  -1,348
  -1,445
  -1,546
  -1,651
  -1,761
  -1,874
  -1,993
  -2,116
  -2,244
  -2,378
  -2,517
  -2,662
  -2,814
New CAPEX, $m
  -669
  -316
  -342
  -372
  -401
  -429
  -457
  -484
  -511
  -537
  -563
  -589
  -615
  -640
  -667
  -693
  -721
  -749
  -778
  -809
  -841
  -874
  -909
  -946
  -985
  -1,026
  -1,069
  -1,115
  -1,163
  -1,213
  -1,267
Cash from investing activities, $m
  -4,999
  -528
  -594
  -666
  -742
  -820
  -902
  -986
  -1,073
  -1,163
  -1,256
  -1,353
  -1,452
  -1,554
  -1,661
  -1,771
  -1,885
  -2,003
  -2,126
  -2,254
  -2,387
  -2,525
  -2,670
  -2,820
  -2,978
  -3,142
  -3,313
  -3,493
  -3,680
  -3,875
  -4,081
Free cash flow, $m
  -1,841
  953
  1,085
  1,234
  1,403
  1,593
  1,801
  2,029
  2,276
  2,540
  2,822
  3,010
  3,325
  3,655
  4,002
  4,363
  4,740
  5,132
  5,540
  5,963
  6,403
  6,859
  7,333
  7,826
  8,337
  8,867
  9,419
  9,993
  10,590
  11,211
  11,858
Issuance/(repayment) of debt, $m
  -21
  3,397
  3,697
  4,020
  4,336
  4,645
  4,947
  5,242
  5,530
  5,814
  6,093
  6,371
  6,649
  6,929
  7,212
  7,502
  7,798
  8,104
  8,422
  8,752
  9,097
  9,459
  9,838
  10,237
  10,657
  11,100
  11,567
  12,059
  12,578
  13,126
  13,704
Issuance/(repurchase) of shares, $m
  -886
  256
  199
  126
  32
  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
  3,653
  3,896
  4,146
  4,368
  4,645
  4,947
  5,242
  5,530
  5,814
  6,093
  6,371
  6,649
  6,929
  7,212
  7,502
  7,798
  8,104
  8,422
  8,752
  9,097
  9,459
  9,838
  10,237
  10,657
  11,100
  11,567
  12,059
  12,578
  13,126
  13,704
Total cash flow (excl. dividends), $m
  197
  4,605
  4,981
  5,380
  5,771
  6,238
  6,748
  7,271
  7,806
  8,353
  8,915
  9,382
  9,974
  10,584
  11,214
  11,865
  12,538
  13,236
  13,961
  14,715
  15,500
  16,318
  17,172
  18,063
  18,994
  19,967
  20,986
  22,052
  23,168
  24,337
  25,563
Retained Cash Flow (-), $m
  -953
  -1,790
  -1,956
  -2,127
  -2,294
  -2,457
  -2,617
  -2,773
  -2,926
  -3,076
  -3,224
  -3,371
  -3,518
  -3,666
  -3,816
  -3,969
  -4,126
  -4,288
  -4,456
  -4,630
  -4,813
  -5,004
  -5,205
  -5,416
  -5,638
  -5,872
  -6,119
  -6,380
  -6,655
  -6,944
  -7,250
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
 
  7,791
  3,025
  3,253
  3,477
  3,780
  4,131
  4,498
  4,880
  5,278
  5,691
  6,011
  6,456
  6,919
  7,398
  7,896
  8,412
  8,949
  9,506
  10,085
  10,687
  11,314
  11,967
  12,647
  13,356
  14,095
  14,867
  15,672
  16,514
  17,393
  18,312
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
 
  7,469
  2,769
  2,831
  2,863
  2,930
  2,998
  3,039
  3,050
  3,032
  2,984
  2,855
  2,755
  2,631
  2,484
  2,318
  2,138
  1,947
  1,751
  1,553
  1,358
  1,170
  993
  829
  680
  548
  434
  336
  255
  190
  138
Current shareholders' claim on cash, %
  100
  99.5
  99.3
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1

PayPal Holdings, Inc. is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants. The Company's combined payment solutions, including its PayPal, PayPal Credit, Braintree, Venmo, Xoom and Paydiant products, compose its Payments Platform. It operates a two-sided global technology platform that links its customers, both merchants and consumers, around the globe to facilitate the processing of payment transactions, allowing it to connect merchants and consumers. It allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. It enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card or other stored value products. It offers consumers person-to-person payment solutions through its PayPal Website and mobile application, Venmo and Xoom.

FINANCIAL RATIOS  of  PayPal Holdings (PYPL)

Valuation Ratios
P/E Ratio 61.1
Price to Sales 7.9
Price to Book 5.8
Price to Tangible Book
Price to Cash Flow 27.1
Price to Free Cash Flow 34.4
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 18.3% 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 1201.77 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 $85.3 billion.

RELATED COMPANIES Price Int.Val. Rating
MA Mastercard 145.38 132.40  hold
V VISA Cl A 107.55 158.71  str.buy
EEFT Euronet Worldw 98.71 207.58  str.buy
WU Western Union 20.31 13.63  sell
MGI MoneyGram Inte 15.74 4.16  str.sell
GPN Global Payment 97.17 35.93  str.sell
AXP American Expre 92.09 40.98  str.sell
VNTV Vantiv 69.35 66.07  hold
QIWI QIWI ADR 16.98 37.61  str.buy
FISV Fiserv 128.44 64.35  sell

COMPANY NEWS

▶ PayPal Looks to Extend Reach With Facebook Deal   [03:17PM  The Wall Street Journal]
▶ PayPal Is a Juggernaut   [09:31AM  TheStreet.com]
▶ Why PayPal Is Pushing New All-Time Highs   [08:45AM  24/7 Wall St.]
▶ PayPal Gets a Pop   [05:45PM  Barrons.com]
▶ How to trade the digital payments: 3 buys   [05:00PM  CNBC Videos]
▶ PayPal Earnings, Revenue Top Expectations, Shares Rise   [04:47PM  Investor's Business Daily]
▶ Paypal tops Street 3Q forecasts   [04:17PM  Associated Press]
▶ PayPal Earnings, Revenue Top Expectations, Shares Rise   [04:15PM  Investor's Business Daily]
▶ PayPal beats on top and bottom line   [04:13PM  CNBC Videos]
▶ PayPal Reports Third Quarter 2017 Results   [04:10PM  Business Wire]
▶ 5 Picks For A Booming Tech Market   [07:30PM  Oilprice.com]
▶ 4 Ways to trade the payment space   [05:00PM  CNBC Videos]
▶ "Fast Money" final trades: MU, PYPL and more   [Oct-17-17 05:59PM  CNBC Videos]
▶ Venmo: Coming to a 'Store' Near You   [12:44PM  Barrons.com]
▶ Earnings: 3 Hot Stocks to Watch   [12:25PM  Motley Fool]
▶ How Safe is Venmo and Why is it Free?   [11:34AM  Investopedia]
▶ Stocks Rise As Dow Nears 23,000, UnitedHealth, J&J Lead Dow   [09:41AM  Investor's Business Daily]
▶ David Rolfe Comments on PayPal Holdings   [05:45PM  GuruFocus.com]
▶ PayPal Has Topped Our Target   [03:55PM  TheStreet.com]
▶ Is PayPal a $75 Stock?   [11:54AM  Barrons.com]
▶ PayPal Market Cap Surpasses Amex's   [10:56AM  Investopedia]
▶ [$$] PayPal's Market Value Eclipses AmEx, Nears Morgan Stanley, Goldman   [Oct-14-17 09:55AM  The Wall Street Journal]
Financial statements 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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.