Why PayPal Stock Is Undervalued and a Great Buy Now.

PayPal's stock has been on a rollercoaster ride, but it's now undervalued and a great buy.

The company's revenue growth has been impressive, with a 20% increase in 2022. This growth is driven by the increasing adoption of digital payments and PayPal's strategic partnerships.

PayPal's strong cash flow generation is another reason to be optimistic about its stock. The company generated $4.3 billion in operating cash flow in 2022, a 25% increase from the previous year.

With its strong financials and growing business, PayPal is poised for long-term success.

PayPal's valuation metrics indicate a clear undervaluation of the stock. The company's forward price-earnings ratio is 15.3x, which is significantly lower than its peers. This is a key indicator that PayPal is undervalued relative to its earnings potential.

The enterprise value/EBITDA ratio is another important metric that suggests PayPal is undervalued. With a ratio of 9.2 times, it's clear that the market is underestimating the company's ability to generate earnings and free cash flow relative to its enterprise value.

PYPL's price-to-earnings ratio is 18.9x, which is lower than the peer average of 45.5x. This indicates that PayPal is a good value compared to its peers. Here's a comparison of PYPL's PE ratio with its peers:

PYPL's PEG ratio is 3x, which is lower than the peer average, indicating that the stock is attractively priced given its growth prospects. The company's forward PE ratio is lower than its fair PE ratio of 21.7x, suggesting that PayPal is undervalued.

PayPal's stock has experienced a significant decline, with a 17.72% decrease over the past year and a 79.49% drop over the past three years.

The current stock price of $60.47 per share is 31.7% below its estimated fair value.

Analysts have an average price target of $72.87, indicating a potential upside of 49.28% from the current price.

PayPal's EV/EBITDA ratio of 8.03 and EV/FCF ratio of 10.57 suggest that the market may be underestimating the company's ability to generate earnings and free cash flow relative to its enterprise value.

Some analysts are even projecting a price as high as $132.19, which is a significant increase from the current price.

PayPal stock is undervalued relative to its current price, and here's why. The average price target of Street analysts on the stock is $71.48, which is meaningfully above its current price of around $65.

Only 15 out of 35 analysts who cover the name have "buy" ratings on the shares, indicating a significant upside potential as more analysts upgrade the shares.

The shares have a low Relative Strength rating of 48 and an average Accumulation/Distribution rating of C, according to Investor's Business Daily. This suggests that the stock has underperformed in the last year.

As more investors realize that PayPal stock is a bargain, the shares should rally a great deal. This is evident from the low valuation of the shares and the analysts' price target.

PayPal stock is undervalued relative to its current price. The consensus price target of $77.35 per share from 42 analysts suggests a 30.0% undervaluation.

A discounted cash flow forecast analysis also aligns with this view, pegging intrinsic value of PYPL at $79.90 per share, which would translate to an upside opportunity of 41.0%. PayPal's P/E ratio sits at just 16.2x, making it a bargain compared to its peers.

Its PEG ratio is a rock-bottom 0.23x, indicating that its price relative to future earnings growth is extremely low. PayPal's price-to-sales ratio is also a measly 2.1x, suggesting the company is trading at a really low premium to its top line.

The return on invested capital is 12.3%, meaningfully eclipsing the market average. The return on equity is an impressive 18.8%, and the company has generated $11.7 billion in gross profit.

A further $1 billion was allocated to share repurchases, indicating that management believes the stock is undervalued. The share price has taken a tumble, making it an opportune time to initiate a share buyback scheme.

Here's a comparison of PayPal's PE ratio to its peers:

PayPal's PE ratio of 18.9x is significantly lower than the peer average of 45.5x, making it a good value compared to its peers.