Fundamental analysis on PYPL! Disclaimer: I do not hold any PYPL and may not hold them going forward as well. But, 17% drop over earnings got my interest into having a look into fundamentals. Please note all the analysis done here are derived from the scripts I have written - all of them are open source and free to use.
Let's dig deeper.
🎲 Earnings
News items highlights poor earnings and economic outlook. While economic outlook is unchanged, earnings can be read as below
Earnings miss by 1% 🟠
Revenue exceeds by 0.29% 🟡
Future earnings is expected to go down by 10% 🔴
Future revenue is expected to drop by 5% 🔴
Overall 10-20% drop can be considered as expected. We need to also keep in mind that for growth based stocks, revenue is more important than earnings. But, we cannot exactly say how much of this is already priced in as the stock had significant drop from last 6 months.
🎲 Financial Health
This is derived from the open source script Quality-Screen . The script colour codes the financial metrics listed based on what is considered as healthy/unhealthy as per norms.
We can say overall health of company is very good. 🟢
🎲 Growth Trajectory
Overall growth trajectory is still up. This is derived from open source script Relative-Growth-Screen . Script plots financial growth parameters on Bollinger bands to identify the overall trajectory over long term. This makes sure that short term weakness in growth numbers does not impact the overall stats.
Overall revenue and book value per share seems to be increasing. However, EPS and YoY revenue growth seems to be stagnating. Reduced revenue can have higher impact on stock price for growth stocks.
With this, we can say overall growth trajectory is mildly low. 🟠
🎲 Drawdown from All time high
Below stat is derived from an open source script Drawdown-Range
The stats percentile dropdown from ATH. As we can see in the outcome. PYPL at present is down 44% from ATH. It is still not considering pre-market price. Otherwise, the drawdown from ATH is 55%. As we can see in the chart, this is at 100th percentile. Which means, very rarely PYPL had such kind of drawdown from its all time high in its history of stock price.
This means, price is at record discount level. Which can be very good for value investors. 🟢
🎲 Drawdown from ATH of fundamentals
This is again another fundamentals based stat derived from the open source script Percentile-Price-vs-Fundamentals
The script compares drop in fundaments with that of drop in price to understand if the price drop is justifiable or if it is an overreaction.
From the details highlighted, it does indeed look like price drop is bit overreaction. 🟢
This stat does not consider earnings and revenue estimates into picture. Hence, the impact of this may be limited if there is huge variation between present earnings and estimated guidance for next earnings.
My views on this stock is neutral as being trend follower, I never try to catch a falling knife. But, if you are looking for value based bargains, this can be good pick for you.
All the best and let me know your views in the comments :)
