I believe paypal stock is extremely undervalued at its current price. Trading at just a 13-14 forward PE and a ~6% cash flow yield, $PYPL is essentially being priced for no future growth , and is well below the S&P 500 average.
Despite concerns of competition from Apple and Square, PayPal posted 9% revenue growth , 27% EPS growth and 76% free cash flow growth (Y/Y) in their most recent quarter. Additionally , they reiterated their stock buyback program of at least $5B. My basic thesis is that PayPal will experience accelerated EPS growth due to cost cutting measures and stock buybacks. Because PayPal is already trading so cheaply i believe the risk reward is very attractive.
With such respectable brand value , double digit EPS and cash flow growth , PayPal should be trading at a MINIMUM of a 20 fwd pe. A 20 PE would put the market cap at around $100B based on net income of $5B (projected for 2024 full year)
