PayPal loses $US2.5 billion in MCap, steepest heavyweight fall in Financials sector 12 August 2019

NEWS BITES - NORTH AMERICA

PayPal Holdings (NASDAQ:PYPL), the NASDAQ's largest Financials company by market cap, has dropped $US2.10 (2.0%) from its previous trading session to close at $US102.72. Compared with the NASDAQ-100 Index which fell 84.6 points (1.1%) in the day, the relative price change was -0.9%. The volume was 0.9 times the average daily trading volume of 9 million shares. It posted the steepest fall in MCap with the most influence on the Financials sector. There were 7,797,500 shares worth $US801 million traded today.

Stock Summary

Today's close (USD)102.72
52-Week Range (USD)74.7-121.5
SectorFinancials sector
EPS Growth % (y.o.y)59.1
Shares Outstanding1,174,933,000
Market Cap$US120.7 billion

Highlights in today's Report:

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

SECTION 2 TODAY'S BEARISH SIGNALS

SECTION 3 TODAY'S BULLISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $US102.72):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 REPORTED BUYING AND SELLING

SECTION 8 SUMMARY FINANCIALS

SECTION 9 CORPORATE PROFILE

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

[Volume Index or VI in brackets; 1 is average]

+ Nasdaq: PYPL.NASDAQ 7,797,500 [VI of 0.8] volume 99.57% of aggregate. Price: $US102.72.

+ Xetra: 2PP.ETR 33,645 [VI of 2.2] volume 0.43% of aggregate. Price: EUR93.41. Using the current exchange rate of EUR1 equals 1.1209USD, The shares are at a 1.9% premium to the close price on Nasdaq.

+ Aggregate volume: there were 7.8 million shares of PayPal worth $US804.5 million traded today. The aggregate volume was 0.9 times average trading of 9.2 million shares.

SECTION 2 PAYPAL BEARISH SIGNALS

2.1 Overvaluation [compared with sector average]:

Price/Earnings

+ Price/Earnings of 48 [23.9].

Price/Earnings/Growth

+ Price/Earnings/Growth of 2.9 [0.4]. The price earnings ratio of 48 divided by annual growth in EPS (FY2018 vs FY2017) of 16.8% corresponds to a P/E/G of 2.9 times.

Price to Sales

+ Price/Sales of 7.4 [3.8].

Price to Book

+ Price to Book of 14.6 [4.6].

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 2.8. Compared with the rest of the market the stock is overvalued and ranks in the bottom quartile of stocks by value of Q Ratio.

2.2 Overvaluation Indicators and rank of PayPal in the NASDAQ market:

DescriptionValueRank In Market
Price/Earnings/Growth2.9In Bottom 7%
Price/Earnings48In Bottom Quartile
Price to Sales7.4In Bottom Quartile

2.3 Downtrend:

+ Rising open interest with falling price

+ Open Interest Trend

Same day trend: The price dropped 2.0% from $US104.82 to $US102.72; Open interest has lifted 3.2% from 45,736 to 47,196. A fall in price combined with an increase in open interest suggests there is new money coming into the market from short sellers. This is a bearish signal.

DurationOpen Interest change %Price change %Interpretation
1-day3.2-2.0Weak Market

+ Put Call Contracts

The Put/Call ratio has jumped from 1.124 to 1.165 suggesting a downtrend.

Put ContractsCall ContractsPut/Call ratio
Today25,39921,7971.165
Previous day24,20121,5351.124

+ Put Call Ratio increases 3.6%

Put Call Ratio1 Day1 MonthInterpretation
Change %3.655.1Downtrend

+ Top three traded put options [1 contract is 100 shares]

Exercise PriceExercise DateOption PriceChange %Contracts Traded
$US104.0August 16, 2019$US1.3912.1558
$US106.0August 16, 2019$US2.5721.8287
$US103.0August 16, 2019$US1.01.0264

Today's Volatility:

+ PayPal drops 2.0% on high volatility: Today its volatility (highest price minus lowest price/lowest price) of 2.1% was 0.9 times the average daily volatility of 2.4%, up from 2.0% on Friday and 1.9% on Thursday.

Price/Moving Average Price and MACD:

+ The Price/MAP of 1.02 for PYPL is lower than the Price/MAP for the NASDAQ-100 Index of 1.06.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 108.02 minus the 26-day EMA of 111.34 is negative suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.

+ The price to 50-day EMAP ratio is 0.9, a bearish indicator. The 50-day EMAP has decreased to $US112.32. A decrease is another bearish indicator.

Past Week:

+ PayPal Holdings is placed 1500/2431 in BuySellSignals' ranking of NASDAQ performers in the past week, a percentile ranking of 39.

+ In the past week, volume was 0.8 times average and the shares were down 0.8%. Monday's close price is at a 2.4% discount to its 5-day Volume Weighted Average Price (VWAP) of $US105.19.

Past Month:

+ The present value of $US1,000 (PV1000) invested one month ago in PayPal is $US859, for a capital loss of $US141.

SECTION 3 PAYPAL BULLISH SIGNALS

3.1 Undervaluation [compared with sector average]:

Earnings Yield

+ Earnings yield of 2.1% is 1.2 times the 10-year bond yield of 1.75%.

3.2 Uptrend:

Price/Moving Average Price:

+ The price to 200-day MAP ratio is 1.02, a bullish indicator. In the past 200 days this ratio has exceeded 1.02 170 times suggesting further upside. The 50-day MAP of $US114.36 is higher than the 200-day MAP of $US100.23, another bullish indicator.

Relative Strength (6 months):

+ In the NASDAQ market of 2,430 stocks and 8 units traded today, the stock has a 6-month relative strength of 75 indicating it has outperformed 75% of the market.

3.3 High Price Performance Indicators and rank of PayPal in the NASDAQ market:

DescriptionPYPL ValueRank In Market
MCap$US120.7 billionIn Top 2%
Today's Trading Turnover$US801 millionIn Top 2%

Oversold/Bullish Signals:

+ The Relative Strength Index (RSI) of 19.4 has breached the oversold line of 30, suggesting the price decrease of 19.4% in the last 14 days is unusually high.

+ The stock is oversold according to the Williams % R indicator of -97.3, suggesting the price is close to its 14-day low of $US102.21.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $US102.72):

SECTION 4 THE PAST WEEK

4.1 Snapshot: PayPal stock was down 88.0c or 0.8% in the past week. Volume in the week was 0.8 times average trading of 45.2 million shares. It underperformed the NASDAQ-100 index in 3 out of 5 days.

DayPayPalClose price [USD]Price change %Relative change %Comment
FridayDecreases 1.2%104.82-1.8-0.8Price fall on falling relative strength
ThursdayPut call ratio decreases 18.7%106.790.2-2.1Oversold: close to 14-day low
WednesdayDecreases106.631.51.1Top Rise
TuesdayIncreases 1.9% after finding support105.031.4-0.04Oversold: close to 14-day low
MondayDrops 2.3%103.6-3.30.3Steepest Fall; VI*=1.3

[Volume Index (VI); 1 is average]

4.2 Stock Buzz: Past Week

News DateHeadlinePublisher
Aug 09Brokerages Set Paypal Holdings Inc (NASDAQ:PYPL) Target Price at $121.96Dispatch Tribunal
Aug 09Paypal Holdings Inc (NASDAQ:PYPL) Shares Acquired by First National Corp MA ADVtheenterpriseleader.com

4.3 Volatility:

+ PayPal is at a discount of 15.4% to its 12-month high of $US121.48 on July 16. It is also at a premium of 37.6% to the 12-month low of $US74.66 on October 11, 2018.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Performance:

+ Return on Equity 13.4% [11.2%].

+ Return on Assets 4.7% [1.5%].

+ Return on Capital Employed 13.6% [2.7%].

+ As per the Du Pont analysis, Return on Equity [ROE] of 13.4% is better than sector average of 11.4%. ROE is computed as net profit margin of 13.3% times asset turnover [sales/assets] of 0.36 times leverage factor [total assets/shareholders' equity] of 2.8.

5.2 Growth:

Quarterly Trend in Revenue, Net Profit and Net Profit Margin:

+ Net Profit margin is positive and has seen consecutive rises in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Jun 19 [Q2]4.323.419.1
Mar 19 [Q1]-2.314.216.2
Dec 18 [Q4]14.733.913.8
Sep 18 [Q3]95,388.782,789.711.8

5.3 Past 4 Quarters Sequential EPS growth averaged 14.0%:

Quarterly ReportEPS (c)Growth %
Q2/201970.022.8
Q1/201957.014.0
Q4/201850.035.1
Q3/201837.0-15.9

The most recent quarter (Q2/2019) showed a rise of 22.8% in sequential growth of Quarterly EPS. There have been three rises and one decline in the past 4 quarters. Average quarterly growth in the past 4 quarters was impressive at 14.0%.

5.4 Past 5 years Annual EPS growth:

Annual ReportEPSGrowth %
2018$US1.7416.8
2017$US1.4928.4
2016$US1.1616.0
2015$US1.0194.1
201434.0c-56.6

Average Annual Compounded rate of growth in EPS for the 5 years was impressive at 17.3%. There have been four rises and one decline in the past 5 years.

5.5 Moving Annual Return (Past 3 years)

Based on a dynamic start date of 3 years ago, the real rate of return has averaged 40.2%. The Moving Annual Return has consistently exceeded 18%.

PYPLClose (USD)Annual Return %
Aug 12102.7218.1
1 Yr ago87.0145.8
2 Yrs ago59.6756.6

Close 3 years ago $US38.10

5.6 Increased VWAP

Past five years, 12 months ended Aug 12 (USD)

YearHigh PriceVWAPLow Price
2019121.4895.0174.66
201892.3576.358.27
201761.345.4636.3
201641.7536.2330.0
201539.9138.5936.83

In the past five years Volume Weighted Average Price (VWAP) has increased by 146.2% to $US95.01. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.

5.7 Increased Average Daily Turnover

Past five years, 12 months ended Aug 12 (USD million)

YearAverage Daily Turnover
2019731.0
2018638.4
2017338.9
2016347.4
201522.7

In the past five years, average daily share turnover has increased 3127.0% to $US731 million. This suggests increased liquidity.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 Performance:

+ Net profit margin has averaged 13.3% in the last 3 years. This is lower than the sector average of 17.7% and suggests a low margin of safety.

6.2 Growth:

+ Year-on-Year Earnings Growth of 16.8% [60.3%].

6.3 High Debt Indicators:

+ Total Liabilities/EBITDA of 8.9 compares unfavourably with the Joseph Piotroski benchmark of 5.

6.4 Low Growth and Performance Indicator and rank of PayPal in the NASDAQ market:

DescriptionValueRank In Market
EPS Growth %16.8In Bottom Quartile

6.5 Declining ADVT past five years

Avg. Daily Volume Traded 12 months ended Aug 12, million shares

YearADVT
20199.0
20188.3
20177.4
20169.5
201512.2

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 26.2% to 9 million shares.

6.6 Decrease in Institutional Ownership

Quarter-endDecember 31, 2018March 31, 2019
Holdings (%)80.873.4

As at March 31, 2019 Institutions held 73.4% of total shares on issue; a decrease from 80.8% as at December 31, 2018.

6.7 Increase in Insider Selling

In the past 4 years a total of 2,391,161 PayPal shares worth $US176.3 million were sold by insiders. Based on a dynamic start date of 4 years ago, insider selling has averaged 597,790 shares per year. In the past year, insiders sold 1,014,889 shares, an increase of 46.7% from the previous year.

SECTION 7 PAYPAL REPORTED BUYING AND SELLING

7.1 Institutional Buying and Selling Quarter Ended March 31

Total reported Institutional buying = 39,927,476 shares

Total reported Institutional selling = 39,451,572 shares

Net reported institutional buying = 475,904 shares

7.2 Reported Holdings of Institutions as at Mar 31, 2019

Total = 862,064,238 shares

Market Value = $US89.5 billion

Institutions hold 73.4% of Issued Shares.

SECTION 8 PAYPAL SUMMARY FINANCIALS

8.1 Financials Summary

Year endedDec 2018Dec 2017Dec 2016
Sales (USD B)15.513.110.8
Pretax (USD B)2.42.21.6
Net (USD B)2.11.81.4
EPS (USD)1.741.491.16

+ Net profit was up 14.6% from US$1.8 billion in 2017 to US$2.1 billion in 2018.

+ Earnings Per Share (EPS) was up 16.8% from $US1.49 to $US1.74.

8.2 Quarterly Report: Key Parameters

Quarterly Report Analysis Q2 2019: PayPal EPS climbs 23%

PayPal (NASDAQ:PYPL), announced EPS of 70.0c for the quarter-ended 30 June 2019 [Q2/2019], up 22.8% sequentially from 57.0c in the previous quarter [Q1/2019].

Quarter-ended30 Jun [Q2/2019]31 Mar [Q1/2019]31 Dec [Q4/2018]
EPS, c70.057.050.0
Sequential growth in EPS %22.8114.035.14
Revenue$US4.3b$US4.1b$US4.2b
Sequential growth in Revenue %4.29-2.3214.74
Net Profit$US823m$US667m$US584m
Sequential growth in Net Profit %23.3914.2133.94

Compared with the previous corresponding period [PCP; Q2/2018], year-over-year [y.o.y.] EPS was up 59.1%, Revenue was up 11.6% and Net Profit was up 56.5%.

Quarter-ended30 Jun [Q2/2019]30 Jun [Q2/2018]
EPS, c70.044.0
PCP growth in EPS %59.0929.41
Revenue$US4.3b$US3.9b
PCP growth in Revenue %11.62122,891.07
Net Profit$US823m$US526m
PCP growth in Net Profit %56.46127,880.54

8.3 Annual Report: Key Parameters

FY2018 Annual Report: PayPal maintains double digit EPS Growth

PayPal (NASDAQ:PYPL), announced EPS of $US1.74 for the year-ended 31 December 2018, up 16.8% from $US1.49 in the previous year. Last year the company had reported EPS growth of 28.4% from $US1.16 in FY2016 to $US1.49 in FY2017.

Period-endedEPS in $US
31 December 20181.74
31 December 20171.49
31 December 20161.16

Major changes compared with previous year:

Favourable Changes:

- Net profit up 14.6% from $US1.8b to $US2.1b

- Total revenue up 18% from $US13.1b to $US15.5b

- EPS up 16.8% from $US1.49 to $US1.74

- Total revenue to total assets up from 0.3 to 0.4

- Retained earnings to total assets up from 9.0% to 13.8%

- Total non-current assets to Total Assets up from 19.9% to 23.9%

- Fixed Assets to Total Assets up from 3.7% to 4%

Unfavourable Changes:

- EBIT Margin down from 16.8% to 15.4%

- Profit before tax to Revenues down from 16.8% to 15.4%

- Administration expenses to Revenues up from 8.8% to 9.4%

- Current ratio down 11.2% from 1.4 to 1.3

- Working capital to total assets down from 24.0% to 16.3%

- Total current assets to Total Assets down from 80.1% to 76.1%

- Current Debtors to Total Assets down from 15.7% to 5.8%

- Total Liabilities to EBITDA of 8.9 compares unfavourably with the Joseph Piotroski benchmark of <5. This ratio has deteriorated by 7.5% from the previous year's ratio of 8.2.

- Total Liabilities to Operating Cash Flow of 5.1 compares unfavourably with the Joseph Piotroski benchmark of <4. However, it has improved by 47.9% from the previous year's ratio of 9.8.

- Net tangible assets per share down 26.9% from $US9.41 to $US6.88

Note:

- EBIT to total assets steady at 5.5%

- Sales and marketing expenses to Revenues down from 8.6% to 8.5%

- Depreciation to Revenues down from 6.1% to 5%

- Tax expenses to Revenues down from 3.1% to 2.1%

- Total liabilities to Total assets steady at 0.6

- Intangibles to Total Assets up from 11.1% to 16.4%

Annual Report [Year-on-year comparison: 2018 vs 2017]

Company Name : PayPal Holdings (PYPL)
December 3120182017Change
Description$US m$US m(%)
Total Revenue15,45113,094Up 18
EBITDA3,1523,005Up 4.9
Depreciation776805Down 3.6
EBIT2,3762,200Up 8
Pre-Tax Profit/(Loss)2,3762,200Up 8
Profit/(Loss) after Tax2,0571,795Up 14.6
Working Capital7,0599,782Down 27.8
Current Assets32,96332,645Up 1
Current Liabilities25,90422,863Up 13.3
Shareholders' Funds15,38615,994Down 3.8
Total Liabilities27,94624,780Up 12.8
Total Assets43,33240,774Up 6.3
Net Assets15,38615,994Down 3.8
Net Tangible Assets8,27711,487Down 27.9
AuditorPricewaterhouseCoopers LLP 

Year-on-year comparison of Per Share figures

December 3120182017Change (%)
Description$US $US
EBIT2182.9 cUp 9.7
EBITDA2.72.5Up 6.6
Working Capital68.1Down 26.7
Shareholders' Funds1313.3Down 2.3
Total Liabilities23.620.6Up 14.6
Total Assets36.633.9Up 8
Net Tangible Assets6.99.4Down 26.9
EPS Final174c149 cUp 16.8
    EPS Growth Factor*1.15  

* EPS Growth Factor = EPS growth / Net Profit growth

Year-on-year comparison of Performance Ratios

December 3120182017Change (%)
Return on Equity (%)13.411.2Up 19.6
Return on Assets (%)4.74.4Up 6.8
Total Liabilities to EBITDA8.98.2Up 7.5
Total Liabilities to Operating Cash Flow5.19.8Down 47.9
Total Liabilities/Total Assets (Up 4.9% from 0.61 to 0.64)0.60.6Up 4.9
Current Ratio1.31.4Down 11.2
Common Size Ratios by Assets %
Total current assets to Total Assets 76.1 80.1 Down 5.0
Total non-current assets to Total Assets 23.9 19.9 Up 19.9
Intangibles to Total Assets 16.4 11.1 Up 48.4
Current Debtors to Total Assets 5.8 15.7 Down 63.0
Fixed Assets to Total Assets 4.0 3.7 Up 6.7
Common Size Ratios by Revenues %
Profit before tax to Revenues 15.4 16.8 Down 8.3
Administration expenses to Revenues 9.4 8.8 Up 6.6
Sales and marketing expenses to Revenues 8.5 8.6 Down 1.3
Depreciation to Revenues 5.0 6.1 Down 18.7
Tax expenses to Revenues 2.1 3.1 Down 32.1

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged $US11.3B, EBITDA averaged $US2.5B and Net Profit averaged $US1.4B. Compound Annual Growth Rate (CAGR) averaged 18.1% for Total Revenue, 16.6% for Net Profit and 15.4% for EBITDA.

DescriptionAnnual ($US B)5-year Avg ($US B)5-year CAGR %
Total Revenue15.511.318.1
EBITDA3.22.515.4
Operating Profit2.41.817
Net Profit2.11.416.6

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2018 Net Profit Margin of 13.3% was above its 5-year Avg of 11.7% (All Figures in %)

Description20185-year Avg
EBITDA Margin20.422
Operating Profit Margin15.415.8
Net Profit Margin13.311.7
Return on Equity13.49.6
Return on Assets4.73.9
Return on Capital Employed13.612.1

SECTION 9 CORPORATE PROFILE

9.1 Activities

PayPal Holdings Inc is a technology platform company that enables digital and mobile payments on behalf of consumers and merchants. The Company''s payments platform includes PayPal, PayPal Credit, Venmo and Braintree products.

9.2 Top Management

The chairman is John J. Donahoe, the chief executive officer is Daniel H. Schulman and the chief financial officer is John Rainey.

9.3 Issued Capital and MCap

Based on 1,174,933,000 issued shares the market capitalisation is $US120.7 billion.

9.4 Vanguard Total World Stock ETF 7701:

The stock was one of 7701 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 1,159 shares in the period May 31, 2019 to Jun 30, 2019 worth $US-131,275 at an estimated Volume Weighted Average Price (VWAP) of $US113.2658. As at Jun 30, 2019, the Vanguard Total World Stock ETF held 387,646 shares worth $US43,907,034 or 0.25% by value of the ETF's portfolio [Ranked 44 out of 7701 by value and 12 out of 680 for NASDAQ].

COMPANY IDENTIFIERS

Contact: 1 408 967-1000

Physical Address: 2211 North First Street, San Jose, CA,95131

State/Province/Country: United States

Country of Incorporation: United States

Industry [NAICS]: 522390

Exchange: NASDAQ

Economic Sector: Financials

ISIN: US70450Y1038

O:PYPL; PYPL.O

RIC: PYPL.O

CIK: 1633917

CUSIP: 70450Y103

Paypal Holdings Inc, Paypal Holdings, Inc

Source: www.BuySellSignals.com