PayPal Holdings, Inc. (NASDAQ:PYPL) stock has been up more than 200% since it was spun out of eBay in 2017, but this stock has been hammered recently after the company reported disappointing fourth-quarter results. So, is right now a good time to pick up a couple of PayPal shares?
PayPal stock fundamental analysis
PayPal’s financial statements look fantastic. Revenue growth has been strong for many years and clocked in at more than $25 billion in 2021. The gross margin clocked in at nearly 60% for the fourth quarter, and what’s more impressive is that the company generated huge amounts of both net income and free cash flow, both numbers clocking in at more than $5.4 billion in 2021.
In addition, the company’s balance sheet is in good shape, with more cash than debt and the company boasting more than $9.5 billion in cash on its books. And given that the company is profitable, its returns on capital (ROC) are high.
PayPal stock technical analysis
Source – TradingView
Turning to PayPal’s stock technical analysis, prices have been falling strongly lately as the stock has been under huge selling pressure. This is mainly because the long and short term trend of the stock is negative.
However, the stock has still outperformed the market, both since its IPO and over the last five years. Now, the stock does tend to have a history of exceeding Wall Street’s estimates, although it did miss when it most recently reported its returns, and this prompted the stock to continue the negative trend as more investors continue to dump their shares.
So is the stock a buy?
Despite PayPal stock selling off so hugely over the last couple of months, the valuation for the company is still higher than the average company in the S&P 500.
However, shares are not nearly as expensive as they were, and the valuation risk is not huge today, given how much shares have fallen. Irrespective of this, the stock is still a buy for long term investors.