Which payout stock is best for your wallet? PYPL or V

Soaring inflation has led the Federal Reserve to raise benchmark interest rates four times this year. While rising prices have weakened consumer confidence, a shifting spending pattern has led Americans to continue spending on travel, retail and technology.

According to the Bureau of Economic Analysis. Expenditure on trips abroad was 89.3% higher in June only at the beginning of the year. This trend should benefit payment stocks PayPal Holdings, Inc. (PYPL) and Visa Inc. (V) with increased spending through their platforms.

PYPL operates a technology platform that enables digital payments on behalf of merchants and consumers globally. V operates as a worldwide payment technology company.

V has lost 10.1% over the past year against a 66% decline for PYPL. However, in terms of last month’s performance, PYPL is a clear winner with a 28.1% gain compared to V’s 7.6% returns.

But which stock is better to buy now? Let’s find out.

Latest developments

In June, PYPL announced that it was expanding its suite of credit offerings to create a new business credit card to meet the day-to-day financing needs of small business owners. The PayPal Business Cashback Mastercard, issued by WebBank and powered by the Mastercard network, is the first business credit card offered through PayPal.

The card has no annual fee and rewards cardholders with 2% cash back on all purchases, with no reward caps or expirations, making it one of the most popular cash back rewards. available.

Additionally, in May, PYPL announced the pricing of its previously announced offer to purchase all of the listed company’s outstanding notes for cash. The offer refers to the applicable cash offer to buy the 2.200% senior notes due September 2022.

In May, V announced a partnership with Fundbox, an integrated working capital platform for small businesses, to strengthen Fundbox’s platform with the power of digital payments. The first step in this collaboration is the launch of the Visa Fundbox Flex debit card, issued by Pathward, NA, which helps small businesses better manage their cash outflows.

Recent financial results

For the second quarter ended June 30, 2022, PYPL’s net revenue increased 9.1% year-on-year to $6.81 billion. However, its non-GAAP net income fell 20.8% from the year-ago quarter to $1.08 billion. Non-GAAP net earnings per share decreased 19.1% from the same period a year earlier to $0.93.

V’s net revenue increased 19% year-on-year to $7.28 billion in the third quarter. His operating result rose 2.1% from its value a year ago to $4.15 billion, while its non-GAAP net income was $4.21 billion, up 29 % compared to the quarter of the previous year. The company’s non-GAAP EPS rose 33% year over year to $1.98.

Past and expected financial performance

PYPL’s revenues have grown at a CAGR of 17.6% over the past five years. Analysts expect PYPL’s revenue to grow 10.8% in the current quarter, 10.3% in the current year and 14.3% next year.

On the other hand, V’s revenue has grown at a CAGR of 9.6% over the past five years. Street expects V’s revenue to grow 15% in the current quarter, 20.4% in the current year and 12% next year. The company’s EPS is expected to grow 12.3% in the current quarter, 21.3% in the current year and 17% next year.

Profitability

V is more profitable, with a gross profit margin of 97.33% compared to 43.47% for PYPL. Additionally, V’s net margin of 51.99% compares to PYPL’s negative net margin of 68.6%.

Additionally, V’s ROE, ROA, and ROTC of 39.85%, 14.09%, and 20.09% compare to PYPL’s negative returns of 10.11%, 3.05%, and 7.48%, respectively. .

Thus, V is more profitable.

Evaluation

In terms of forward PEG, PYPL is currently trading at 2.03x, 26.1% higher than V, which is currently trading at 1.61x. Additionally, PYPL’s GAAP P/E of 60.76x is 97.6% higher than V’s of 31.81x.

POWR Rankings

PYPL has an overall rating of D, which is equivalent to selling in our own POWR Rankings system. On the other hand, V has an overall rating of B, which translates to Buy. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

V has a B rating for quality and stability. Its level of quality is in line with the higher profitability of the company. On the other hand, PYPL has a C for Quality, which is justified given its low profitability. Additionally, V’s 0.90 beta is in sync with its stability rating, while PYPL has a C rating for stability, given its 1.49 beta.

Of the 48 D-rated stocks Consumer Financial Services industry, PYPL is ranked #39, while V is ranked #7.

Beyond what we’ve stated above, we’ve also rated stocks for growth, momentum, quality, momentum and sentiment. Click here to see the PYPL notes. Get all V odds here.

The winner

Rising consumer spending on travel, retail and technology despite decades-high inflation could help payments companies like PYPL and V. However, V’s relatively lower valuation and higher profitability high make it a better bet now.

Our research shows that the odds of success increase when investing in stocks with an overall buy or strong buy rating. See all the top-rated stocks in the consumer financial services sector here.


Shares of PYPL were trading at $96.75 per share on Monday afternoon, up $1.43 (+1.50%). Year-to-date, the PYPL is down -48.70%, compared to a -12.24% rise in the benchmark S&P 500 over the same period.

About the Author: Spandan Khandelwal

Spandan’s is a financial journalist and investment analyst specializing in the stock market. Through its ability to interpret financial data, it aims to help investors assess a company’s fundamentals before investing. After…

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