PayPal Undervalued Trade Call Based on Attractive Valuation Metrics

3 months ago

Parkev Tatevosian, CFA

"PayPal is trading at a forward price to earnings of 13. This is the lowest the stock has traded for going all the way back to 2019. There have been very brief moments where you've been able to buy this stock at a lower price, but those moments have been rare. Furthermore, it's trading at a forward price to earnings of 13. This is, let's say, it's 1/5th the valuation of SoFi stock. It's, um, 1/20th the valuation of a company like Palanteer or Tesla. It's 1/2 or roughly 1/2 or maybe 40% the value of the average stock in the S&P 500. So this is a cheap valuation regardless of how you measure valuation. I also measure valuation using a proprietary discounted cash flow model. And so, sorry, PayPal stock is trading at a market price of $76 even after this increase. And the intrinsic value per share I calculated is $133. So even in this valuation metric, PayPal stock looks cheap. So across the board, nearly every valuation metric I use and compare, PayPal stock looks cheap. And so when I'm looking at these kinds of performance results for a stock that this cheap makes it a really attractive investment."

The speaker highlights that PayPal (PYPL) is undervalued given its forward P/E ratio of 13, its current market price of $76, and an intrinsic value of $133. With valuation metrics comparing favorably to peers like SoFi, Tesla, and the S&P 500 average, the speaker considers the stock an attractive trade and explicitly supports a long-term buy recommendation.

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