Is PayPal Holdings Inc (PYPL) overvalued?
On Equity Rank's model estimate, PYPL trades 27% below its fair value. PayPal Holdings Inc (PYPL) last closed at $59.24; the multi-method model fair value is $81.07.
| Price | Model fair value | Price vs model |
|---|---|---|
| $59.24 | $81.07 | 27% below |
What the answer rests on
- 6 of 11 valuation methods put PYPL's value above its price and 5 put it below, so the methods disagree.
- To justify today's price, PYPL's free cash flow would need to grow about -2.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 2.9% a year.
- PYPL trades at 11.5 times its last year's earnings, against a median of 30.8 for 8 profitable Fintech companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 63% below to 24% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind PYPL's fair value · What prices assume · Other companies