Intrinsic value of PayPal Holdings, Inc. - PYPL

Previous Close

$101.27

  Intrinsic Value

$59.06

stock screener

  Rating & Target

sell

-42%

Previous close

$101.27

 
Intrinsic value

$59.06

 
Up/down potential

-42%

 
Rating

sell

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 0001), $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 118.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.90
  12.11
  11.40
  10.76
  10.18
  9.66
  9.20
  8.78
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
Revenue, $m
  17,444
  19,557
  21,786
  24,130
  26,587
  29,157
  31,839
  34,634
  37,543
  40,569
  43,715
  46,985
  50,382
  53,913
  57,583
  61,399
  65,368
  69,497
  73,796
  78,274
  82,939
  87,803
  92,876
  98,170
  103,697
  109,470
  115,503
  121,808
  128,402
  135,300
Variable operating expenses, $m
  14,527
  16,200
  17,965
  19,822
  21,768
  23,803
  25,927
  28,140
  30,445
  32,841
  34,622
  37,211
  39,902
  42,699
  45,605
  48,627
  51,771
  55,041
  58,446
  61,992
  65,687
  69,539
  73,557
  77,750
  82,127
  86,699
  91,477
  96,471
  101,693
  107,157
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
  14,527
  16,200
  17,965
  19,822
  21,768
  23,803
  25,927
  28,140
  30,445
  32,841
  34,622
  37,211
  39,902
  42,699
  45,605
  48,627
  51,771
  55,041
  58,446
  61,992
  65,687
  69,539
  73,557
  77,750
  82,127
  86,699
  91,477
  96,471
  101,693
  107,157
Operating income, $m
  2,918
  3,357
  3,821
  4,308
  4,819
  5,354
  5,912
  6,493
  7,098
  7,728
  9,093
  9,773
  10,480
  11,214
  11,978
  12,772
  13,597
  14,456
  15,350
  16,282
  17,252
  18,264
  19,319
  20,420
  21,570
  22,771
  24,026
  25,337
  26,709
  28,144
EBITDA, $m
  4,161
  4,665
  5,197
  5,756
  6,342
  6,955
  7,594
  8,261
  8,955
  9,677
  10,427
  11,207
  12,018
  12,860
  13,735
  14,646
  15,592
  16,577
  17,603
  18,671
  19,784
  20,944
  22,154
  23,417
  24,735
  26,112
  27,551
  29,055
  30,628
  32,273
Interest expense (income), $m
  4
  108
  301
  507
  724
  953
  1,193
  1,443
  1,705
  1,978
  2,262
  2,557
  2,864
  3,183
  3,514
  3,859
  4,217
  4,589
  4,976
  5,379
  5,799
  6,235
  6,691
  7,165
  7,660
  8,177
  8,716
  9,279
  9,868
  10,483
  11,126
Earnings before tax, $m
  2,810
  3,056
  3,314
  3,584
  3,866
  4,161
  4,468
  4,788
  5,121
  5,466
  6,536
  6,909
  7,297
  7,700
  8,119
  8,555
  9,008
  9,480
  9,971
  10,483
  11,017
  11,573
  12,154
  12,760
  13,393
  14,055
  14,747
  15,470
  16,226
  17,018
Tax expense, $m
  759
  825
  895
  968
  1,044
  1,124
  1,206
  1,293
  1,383
  1,476
  1,765
  1,866
  1,970
  2,079
  2,192
  2,310
  2,432
  2,560
  2,692
  2,830
  2,975
  3,125
  3,282
  3,445
  3,616
  3,795
  3,982
  4,177
  4,381
  4,595
Net income, $m
  2,051
  2,231
  2,419
  2,616
  2,823
  3,038
  3,262
  3,495
  3,738
  3,990
  4,772
  5,044
  5,327
  5,621
  5,927
  6,245
  6,576
  6,920
  7,279
  7,653
  8,042
  8,449
  8,872
  9,315
  9,777
  10,260
  10,765
  11,293
  11,845
  12,423

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  48,863
  54,781
  61,025
  67,591
  74,474
  81,671
  89,184
  97,013
  105,163
  113,639
  122,452
  131,610
  141,127
  151,017
  161,297
  171,986
  183,103
  194,670
  206,712
  219,254
  232,322
  245,947
  260,157
  274,987
  290,469
  306,640
  323,537
  341,200
  359,671
  378,993
Adjusted assets (=assets-cash), $m
  48,863
  54,781
  61,025
  67,591
  74,474
  81,671
  89,184
  97,013
  105,163
  113,639
  122,452
  131,610
  141,127
  151,017
  161,297
  171,986
  183,103
  194,670
  206,712
  219,254
  232,322
  245,947
  260,157
  274,987
  290,469
  306,640
  323,537
  341,200
  359,671
  378,993
Revenue / Adjusted assets
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
Average production assets, $m
  5,111
  5,730
  6,383
  7,070
  7,790
  8,543
  9,329
  10,148
  11,000
  11,887
  12,809
  13,767
  14,762
  15,797
  16,872
  17,990
  19,153
  20,363
  21,622
  22,934
  24,301
  25,726
  27,213
  28,764
  30,383
  32,075
  33,842
  35,690
  37,622
  39,643
Working capital, $m
  -2,913
  -3,266
  -3,638
  -4,030
  -4,440
  -4,869
  -5,317
  -5,784
  -6,270
  -6,775
  -7,300
  -7,846
  -8,414
  -9,003
  -9,616
  -10,254
  -10,916
  -11,606
  -12,324
  -13,072
  -13,851
  -14,663
  -15,510
  -16,394
  -17,317
  -18,282
  -19,289
  -20,342
  -21,443
  -22,595
Total debt, $m
  5,569
  9,385
  13,413
  17,648
  22,088
  26,730
  31,576
  36,625
  41,882
  47,349
  53,033
  58,940
  65,079
  71,458
  78,089
  84,983
  92,153
  99,614
  107,381
  115,471
  123,900
  132,688
  141,853
  151,418
  161,404
  171,835
  182,733
  194,126
  206,040
  218,502
Total liabilities, $m
  31,517
  35,333
  39,361
  43,596
  48,036
  52,678
  57,524
  62,573
  67,830
  73,297
  78,981
  84,888
  91,027
  97,406
  104,037
  110,931
  118,101
  125,562
  133,329
  141,419
  149,848
  158,636
  167,801
  177,366
  187,352
  197,783
  208,681
  220,074
  231,988
  244,450
Total equity, $m
  17,346
  19,447
  21,664
  23,995
  26,438
  28,993
  31,660
  34,440
  37,333
  40,342
  43,470
  46,722
  50,100
  53,611
  57,261
  61,055
  65,002
  69,108
  73,383
  77,835
  82,474
  87,311
  92,356
  97,620
  103,116
  108,857
  114,856
  121,126
  127,683
  134,542
Total liabilities and equity, $m
  48,863
  54,780
  61,025
  67,591
  74,474
  81,671
  89,184
  97,013
  105,163
  113,639
  122,451
  131,610
  141,127
  151,017
  161,298
  171,986
  183,103
  194,670
  206,712
  219,254
  232,322
  245,947
  260,157
  274,986
  290,468
  306,640
  323,537
  341,200
  359,671
  378,992
Debt-to-equity ratio
  0.320
  0.480
  0.620
  0.740
  0.840
  0.920
  1.000
  1.060
  1.120
  1.170
  1.220
  1.260
  1.300
  1.330
  1.360
  1.390
  1.420
  1.440
  1.460
  1.480
  1.500
  1.520
  1.540
  1.550
  1.570
  1.580
  1.590
  1.600
  1.610
  1.620
Adjusted equity ratio
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,051
  2,231
  2,419
  2,616
  2,823
  3,038
  3,262
  3,495
  3,738
  3,990
  4,772
  5,044
  5,327
  5,621
  5,927
  6,245
  6,576
  6,920
  7,279
  7,653
  8,042
  8,449
  8,872
  9,315
  9,777
  10,260
  10,765
  11,293
  11,845
  12,423
Depreciation, amort., depletion, $m
  1,243
  1,308
  1,376
  1,447
  1,522
  1,601
  1,683
  1,768
  1,857
  1,949
  1,334
  1,434
  1,538
  1,645
  1,757
  1,874
  1,995
  2,121
  2,252
  2,389
  2,531
  2,680
  2,835
  2,996
  3,165
  3,341
  3,525
  3,718
  3,919
  4,129
Funds from operations, $m
  3,294
  3,539
  3,795
  4,064
  4,345
  4,639
  4,945
  5,263
  5,595
  5,940
  6,106
  6,478
  6,865
  7,267
  7,684
  8,119
  8,571
  9,041
  9,531
  10,042
  10,574
  11,128
  11,707
  12,311
  12,942
  13,601
  14,290
  15,011
  15,764
  16,552
Change in working capital, $m
  -333
  -353
  -372
  -391
  -410
  -429
  -448
  -467
  -486
  -505
  -525
  -546
  -567
  -590
  -613
  -637
  -663
  -690
  -718
  -748
  -779
  -812
  -847
  -884
  -923
  -964
  -1,007
  -1,053
  -1,101
  -1,152
Cash from operations, $m
  3,627
  3,892
  4,167
  4,455
  4,755
  5,068
  5,392
  5,730
  6,081
  6,445
  6,631
  7,024
  7,432
  7,856
  8,297
  8,756
  9,234
  9,731
  10,249
  10,789
  11,353
  11,941
  12,554
  13,195
  13,865
  14,565
  15,298
  16,064
  16,865
  17,704
Maintenance CAPEX, $m
  -472
  -532
  -597
  -665
  -736
  -811
  -890
  -972
  -1,057
  -1,146
  -1,238
  -1,334
  -1,434
  -1,538
  -1,645
  -1,757
  -1,874
  -1,995
  -2,121
  -2,252
  -2,389
  -2,531
  -2,680
  -2,835
  -2,996
  -3,165
  -3,341
  -3,525
  -3,718
  -3,919
New CAPEX, $m
  -581
  -619
  -653
  -687
  -720
  -753
  -786
  -819
  -852
  -887
  -922
  -958
  -995
  -1,035
  -1,075
  -1,118
  -1,163
  -1,210
  -1,260
  -1,312
  -1,367
  -1,425
  -1,486
  -1,551
  -1,619
  -1,691
  -1,767
  -1,848
  -1,932
  -2,021
Cash from investing activities, $m
  -1,053
  -1,151
  -1,250
  -1,352
  -1,456
  -1,564
  -1,676
  -1,791
  -1,909
  -2,033
  -2,160
  -2,292
  -2,429
  -2,573
  -2,720
  -2,875
  -3,037
  -3,205
  -3,381
  -3,564
  -3,756
  -3,956
  -4,166
  -4,386
  -4,615
  -4,856
  -5,108
  -5,373
  -5,650
  -5,940
Free cash flow, $m
  2,574
  2,740
  2,917
  3,103
  3,299
  3,503
  3,717
  3,939
  4,171
  4,412
  4,471
  4,732
  5,003
  5,284
  5,577
  5,881
  6,197
  6,526
  6,869
  7,225
  7,597
  7,984
  8,388
  8,810
  9,250
  9,709
  10,189
  10,691
  11,216
  11,764
Issuance/(repayment) of debt, $m
  3,571
  3,817
  4,028
  4,235
  4,439
  4,643
  4,846
  5,050
  5,257
  5,468
  5,684
  5,907
  6,138
  6,379
  6,631
  6,894
  7,170
  7,461
  7,767
  8,089
  8,429
  8,788
  9,166
  9,565
  9,986
  10,430
  10,899
  11,393
  11,914
  12,463
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  3,571
  3,817
  4,028
  4,235
  4,439
  4,643
  4,846
  5,050
  5,257
  5,468
  5,684
  5,907
  6,138
  6,379
  6,631
  6,894
  7,170
  7,461
  7,767
  8,089
  8,429
  8,788
  9,166
  9,565
  9,986
  10,430
  10,899
  11,393
  11,914
  12,463
Total cash flow (excl. dividends), $m
  6,145
  6,557
  6,945
  7,338
  7,738
  8,146
  8,562
  8,989
  9,428
  9,880
  10,155
  10,639
  11,141
  11,663
  12,207
  12,775
  13,367
  13,987
  14,635
  15,314
  16,026
  16,772
  17,554
  18,375
  19,236
  20,139
  21,088
  22,084
  23,129
  24,227
Retained Cash Flow (-), $m
  -1,960
  -2,101
  -2,217
  -2,331
  -2,443
  -2,555
  -2,667
  -2,779
  -2,893
  -3,009
  -3,128
  -3,251
  -3,379
  -3,511
  -3,649
  -3,794
  -3,947
  -4,106
  -4,275
  -4,452
  -4,639
  -4,837
  -5,045
  -5,264
  -5,496
  -5,741
  -5,998
  -6,270
  -6,557
  -6,859
Prev. year cash balance distribution, $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 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
  4,185
  4,456
  4,728
  5,008
  5,295
  5,591
  5,895
  6,210
  6,535
  6,871
  7,027
  7,388
  7,763
  8,152
  8,558
  8,980
  9,421
  9,881
  10,361
  10,862
  11,387
  11,935
  12,509
  13,110
  13,739
  14,399
  15,089
  15,813
  16,572
  17,368
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
  4,012
  4,080
  4,115
  4,123
  4,104
  4,057
  3,983
  3,881
  3,754
  3,602
  3,337
  3,153
  2,951
  2,737
  2,512
  2,282
  2,050
  1,820
  1,595
  1,380
  1,178
  990
  820
  668
  534
  420
  324
  245
  181
  131
Current shareholders' claim on cash, %
  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. 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, Inc. (PYPL)

Valuation Ratios
P/E Ratio 87.2
Price to Sales 11.3
Price to Book 8.3
Price to Tangible Book
Price to Cash Flow 38.7
Price to Free Cash Flow 49.1
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 $15451 million for the last fiscal year's total revenue generated by PayPal Holdings, Inc.. The default revenue input number comes from 0001 income statement of PayPal Holdings, Inc.. 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 12.9% 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, Inc., 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, Inc..
    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 83.8%.

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 5.4% for PayPal Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for PayPal Holdings, Inc.. 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 29.3%.

Life of production assets of 9.6 years is the average useful life of capital assets used in PayPal Holdings, Inc. 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 -16.7%. 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 - $15386 million for PayPal Holdings, Inc. - 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 1173.235 million for PayPal Holdings, Inc. 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, Inc. at the current share price and the inputted number of shares is $118.8 billion.

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