PayPal (PYPL) trades at $45.65 per share on a $41.7B market cap and 8.2x trailing earnings. Under a conservative 3-year scenario, the math points to roughly 15% of upside. Revenue compounding does most of the work in our scenario. Here is the picture that the math sits on top of:
Where PYPL Stands Today
- Valuation: P/E of 8.2 versus a 3-year average of 14.5 and a 3-year high of 20.5.
- Revenue: Revenue grew 5.8% over the last twelve months, with a 3-year average revenue growth of 6.3%.
- Net Margin: Running at 15.0% LTM, against a 3-year average of 14.3% and a 3-year peak of 15.8%.
The Three Levers Of Upside
Today’s price is paying for some combination of these three. Under our conservative calibration:
- Revenue compounding at 5.2%…
