![](https://a673b.bigscoots-temp.com/wp-content/uploads/2019/10/imageforentry28-tla.jpg)
![](https://a673b.bigscoots-temp.com/wp-content/uploads/2019/10/imageforentry28-tla.jpg)
Digital payments processor PayPal Holdings Inc. (NASDAQ: PYPL) reported fiscal fourth-quarter earnings after U.S. markets closed on Wednesday. PayPal stock traded up about 4% in after-hours trading.
After a good night’s sleep, investors pushed PayPal stock up by around 7% in premarket trading Thursday morning.
Third-quarter results
![](https://a673b.bigscoots-temp.com/wp-content/uploads/2019/10/imageforentry13-gxq.jpg)
Estimate | Actual | Surprise | |
---|---|---|---|
Revenue ($B) | 7.39 | 7.40 | 0.1% |
Adj EPS | 1.23 | 1.30 | 5.7% |
Compared to the third quarter of last year, revenue was up 8.1% and EPS was up 20.4%.
The headline numbers are good, but looking beyond the headlines reveals at least three good reasons to consider adding PayPal stock to a portfolio.
Revenue growth
![](https://a673b.bigscoots-temp.com/wp-content/uploads/2022/10/imageForEntry5-718.jpg)
![](https://a673b.bigscoots-temp.com/wp-content/uploads/2023/11/PYPLvVIsavMastercard-revenue-growth.png)
PayPal’s revenue growth has kept pace with that of the payment industry’s two giants.
But PayPal’s market cap lags, by a lot:
- PayPal market cap: $56.73 billion (at Wednesday’s closing price)
- Mastercard market cap: $354.31 billion
- Visa market cap: $493.59 billion
Over the past 12 months, PayPal revenue totals $28.56 billion to Mastercard’s $9.4 billion and Visa’s $32.65 billion.
Â
Free cash flow yield
![](https://a673b.bigscoots-temp.com/wp-content/uploads/2019/04/imageforentry21-7y9.jpg)
- PayPal: 6.4%
- Mastercard: 2.96%
- Visa: 4.1%
Because PayPal does not pay a dividend, the FCF yield depends primarily on share buybacks. When Visa reported quarterly results last week, it announced a new $25 billion buyback program. In fiscal 2022, PayPal repurchased $4.9 billion in stock, Visa repurchased $11.7 billion in stock, and Mastercard bought back $8.75 billion in stock.
Profitability
![](https://a673b.bigscoots-temp.com/wp-content/uploads/2019/04/imageforentry10-lir.jpg)
Put simply, PayPal gets no investor love.
Take This Retirement Quiz To Get Matched With An Advisor Now (Sponsored)
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.