PayPal Holdings, Inc. (PYPL) is making waves among investors, emerging as one of the top-searched stocks on Zacks.com. Before diving into the stock's recent performance, it's crucial to understand the key factors that could shape its future trajectory.

Over the past month, PayPal's shares witnessed a 3.9% decline, a contrast to the Zacks S&P 500 composite's 5% increase. However, within the Zacks Internet - Software industry, where PayPal resides, there was an 11.7% uptick. The question that looms large is: What lies ahead for PayPal's stock?

While breaking news can trigger immediate shifts in stock prices, it's essential to focus on fundamental factors when deciding whether to buy and hold a stock.

Earnings Estimate Revisions

Zacks emphasizes the significance of future earnings expectations in determining a company's present stock value. Changes in expert predictions about a company's future earnings directly impact its stock price in the short term.

For the current quarter, PayPal is anticipated to earn $1.17 per share, mirroring the previous year's figures. However, over the last month, analysts have revised down their estimates by 9.9%. Looking at the entire year, the estimated earnings per share stand at $5.01, reflecting a 1.8% decrease from the previous year. In the past month, this estimate has dropped by 10.1%. Next year's projections of $5.50 per share, a 9.7% increase from the previous year, have also witnessed an 11% decrease in the last month.

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The Zacks Rank, a tool tracking changes in earnings predictions, currently designates PayPal as a #4 (Sell), indicating a substantial shift in expectations.

Revenue Growth Forecast

While earnings are crucial, sustained growth depends on a company's ability to increase sales. PayPal is projected to generate $7.5 billion in sales this quarter, marking a 6.6% increase from the previous year. Annual sales estimates for this year and the next indicate expected revenues of $31.82 billion and $34.37 billion, representing 6.9% and 8% growth, respectively.

Last Reported Results and Surprise History

In the last reported quarter, PayPal's sales reached $8.03 billion, a robust 8.7% YoY increase. Earnings per share stood at $1.48, compared to $1.24 the previous year. PayPal consistently outperformed expectations in the past four quarters, exceeding estimated sales by 1.81% and earnings by 8.82%.

Valuation

Examining PayPal's current valuation against industry peers reveals that the stock is trading at a lower price, suggesting a potential buying opportunity.

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Bottom Line

Considering the discussed facts and additional insights on Zacks.com, investors can gauge whether PayPal deserves their attention. However, the current #4 (Sell) Zacks Rank implies caution, signaling that PayPal may face challenges compared to other stocks in the near future. As always, thorough research and a holistic view of the market are key before making investment decisions.