PYPL is trading at a 39% discount to our value of $118. Four of five valuation families agree, and insiders and two funds bought this quarter.
The market is pricing 1.8% long-run growth into a business every discounted model values well above its price, while branded checkout volume compounds at 6% and the buyback retires 5% of the float a year. Four of five valuation families agree on direction; the one that does not is priced off a peer set trading at half its historical multiple.
The other signals in the blend (the reverse solve, flows, filings, calls, revisions, news) carry weights but no dollar value; they sit in the Flows and What changed areas.
PYPL has traded at a discount to our value for most of five years; today's discount is above its own average, not merely positive. Some names are always cheap; this one is cheaper than usual.
| USD | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Gross margin | 48.7% | 49.0% | 48.4% | 46.5% | 45.9% |
| Operating margin | 13.8% | 16.8% | 17.4% | 17.7% | 18.6% |
| Net margin | 8.7% | 12.8% | 13.5% | 13.9% | 13.2% |
| FCF margin | 18.5% | 17.8% | 18.8% | 19.0% | 18.6% |
| Return on equity | 11.9% | 17.8% | 18.7% | 18.7% | 19.3% |
| Return on invested capital | 10.4% | 14.1% | 14.9% | 15.4% | 16.1% |
| Company | Valuation | Profitability | Solvency | One year | Score | Against PYPL |
|---|---|---|---|---|---|---|
| PYPLPayPal | 88 | 71 | 82 | +8.4% | 91 | |
| SQBlock | 64 | 41 | 66 | −12.1% | 58 | cheaper |
| VVisa | 42 | 96 | 94 | +14.2% | 61 | dearer |
| MAMastercard | 38 | 95 | 91 | +16.9% | 57 | dearer |
| AFRMAffirm | 31 | 22 | 48 | +39.8% | 29 | dearer |
| ADYENAdyen | 27 | 74 | 90 | +4.3% | 44 | dearer |
| Company | Valuation | Profitability | Solvency | One year | Score | Against PYPL |
|---|---|---|---|---|---|---|
| VVisa | 42 | 96 | 94 | +14.2% | 61 | dearer |
| MAMastercard | 38 | 95 | 91 | +16.9% | 57 | dearer |
| ADYENAdyen | 27 | 74 | 90 | +4.3% | 44 | dearer |
| PYPLPayPal | 88 | 71 | 82 | +8.4% | 91 | |
| SQBlock | 64 | 41 | 66 | −12.1% | 58 | cheaper |
| AFRMAffirm | 31 | 22 | 48 | +39.8% | 29 | dearer |
| Company | Valuation | Profitability | Solvency | One year | Score | Against PYPL |
|---|---|---|---|---|---|---|
| VVisa | 42 | 96 | 94 | +14.2% | 61 | dearer |
| MAMastercard | 38 | 95 | 91 | +16.9% | 57 | dearer |
| ADYENAdyen | 27 | 74 | 90 | +4.3% | 44 | dearer |
| PYPLPayPal | 88 | 71 | 82 | +8.4% | 91 | |
| SQBlock | 64 | 41 | 66 | −12.1% | 58 | cheaper |
| AFRMAffirm | 31 | 22 | 48 | +39.8% | 29 | dearer |
| Company | Valuation | Profitability | Solvency | One year | Score | Against PYPL |
|---|---|---|---|---|---|---|
| AFRMAffirm | 31 | 22 | 48 | +39.8% | 29 | dearer |
| MAMastercard | 38 | 95 | 91 | +16.9% | 57 | dearer |
| VVisa | 42 | 96 | 94 | +14.2% | 61 | dearer |
| PYPLPayPal | 88 | 71 | 82 | +8.4% | 91 | |
| ADYENAdyen | 27 | 74 | 90 | +4.3% | 44 | dearer |
| SQBlock | 64 | 41 | 66 | −12.1% | 58 | cheaper |
Local and global peers; a peer can be added and any two compared. Scores are out of a hundred; one year is the price return.
A poll of readers, never blended into a value. No user-authored text, no moderation.
Bought inside the zone. Two quarters of sub-four-per-cent branded volume growth would take the DCF near $92 and the verdict to fairly valued; that is my exit condition.
Bought inside the zone. Two quarters of sub-four-per-cent branded volume growth would take the DCF near $92 and the verdict to fairly valued; that is my exit condition.
Notify me when PYPL enters my value zone at $94.40 (20% under our blended value)
Notify me when PYPL enters my value zone at $94.40 (20% under our blended value)
Notify me when PYPL enters my value zone at $94.40 (20% under our blended value)
Notify me when PYPL enters my value zone at $94.40 (20% under our blended value)
Blended value
The weighted average of the valuation families that produce a dollar figure. The weights are shown on the score card and editable in Quant; the blend is a point inside the models' own spread, never outside it.
Value zone
Your threshold on our value: a basis (the blend, one model, the street, or a manual number) less a margin. It moves when the model re-runs, and the letter says why.
Reverse DCF
Holding everything else, what one driver would have to be for the model to equal today's price. It says what the market believes, not what will happen.
Disclosure lag
The days between a trade and its filing. An insider files within two business days; a politician within forty-five; a fund within forty-five of the quarter's end. The lag is part of what a row means.
Provenance
Run id, model version, tunables and vintage: the four things needed to reproduce a figure and the four a screenshot never carries.
7 years of explicit forecast discounted at 9.20%, then a perpetuity at 2.25%, values PYPL at $116 a share against $72.50. 64% of that sits in the terminal value — normal for a business this stable, and the reason the discount rate matters more than any single forecast year.
Model settings
Assumptions
What cash conversion is made of
Of revenue. calc-dcf takes these three separately; the rail asks for their net effect because one ratio is reasonable to hold in your head and three are not.
| USD | 2027F | 2028F | 2029F | 2030F | 2031F | 2032F | 2033F |
|---|---|---|---|---|---|---|---|
| Revenue | 33.8B | 36.0B | 38.3B | 40.8B | 43.4B | 46.1B | 49.1B |
| Operating margin | 19.1% | 19.6% | 20.1% | 20.6% | 21.1% | 21.6% | 22.1% |
| NOPAT | 5.1B | 5.5B | 6.0B | 6.6B | 7.2B | 7.8B | 8.5B |
| Free cash flow to firm | 5.7B | 6.2B | 6.8B | 7.4B | 8.0B | 8.8B | 9.5B |
| Discount factor | 0.96 | 0.88 | 0.80 | 0.73 | 0.67 | 0.62 | 0.56 |
| Present value | 5.4B | 5.4B | 5.4B | 5.4B | 5.4B | 5.4B | 5.4B |
| rate ＼ terminal growth | 1.50% | 1.88% | 2.25% | 2.63% | 3.00% |
|---|---|---|---|---|---|
| 8.20% | $124 | $129 | $135 | $142 | $149 |
| 8.70% | $115 | $120 | $125 | $130 | $136 |
| 9.20% | $108 | $112 | $116 | $120 | $125 |
| 9.70% | $101 | $104 | $108 | $112 | $116 |
| 10.20% | $95 | $98 | $101 | $104 | $108 |
Darker is a higher value per share; the outlined cell is the assumptions on the left, and today’s price is $72.50. A dash is a pair the maths refuses — Gordon needs a discount rate above terminal growth, and it says so rather than printing a number.
| Benchmark | Revenue growth | Value |
|---|---|---|
| Implied by pricetoday's price | 1.8% | $73 |
| 3-year historical | 5.1% | $108+49% |
| Wall Street | 6.3% | $119+64% |
| Our forecast | 6.4% | $121+67% |
| 5-year historical | 7.2% | $131+81% |
Each bar is the value per share if revenue growth settled at that level and nothing else moved. Bars that rise above the dashed rule clear today’s price.
12 of 12 yardsticks put PYPL above the market, with a median implied price of $99 against $72.50. 2 ratios disagree with themselves — P/B, EV/IC cheaper on some yardsticks and dearer on others.
| Ratio | Current | 3Y avg | 5Y avg | Industry | Country | Position | Implied | Upside |
|---|---|---|---|---|---|---|---|---|
| P/SPrice to Sales | 2.3 | 3.4 | 5.1 | 3.1 | 2.4 | −29% | $104 | +43.5% |
| P/EPrice to Earnings | 17.7 | 21.4 | 34.2 | 24.1 | 22.9 | −25% | $98 | +35.2% |
| P/OCFPrice to Operating Cash Flow | 11.4 | 14.1 | 21.8 | 15.2 | 13.6 | −22% | $96 | +32.4% |
| P/FCFEPrice to Free Cash Flow to Equity | 12.2 | 15.9 | 24.4 | 17 | 15.1 | −26% | $101 | +39.3% |
| P/BPrice to Book Value | 3.4 | 3.9 | 5.8 | 2.2 | 3 | −1% | $84 | +15.9% |
| EV/SEnterprise Value to Sales | 2.2 | 3.2 | 4.8 | 3 | 2.3 | −29% | $102 | +40.7% |
| EV/GPEnterprise Value to Gross Profit | 4.8 | 6.8 | 10.1 | 6.4 | 5.5 | −27% | $99 | +36.6% |
| EV/EBITDAEnterprise Value to EBITDA | 9.4 | 12.6 | 18.9 | 13.1 | 11.4 | −27% | $106 | +46.2% |
| EV/EBITEnterprise Value to EBIT | 11.8 | 15.4 | 23.1 | 16.2 | 14 | −25% | $103 | +42.1% |
| EV/OCFEnterprise Value to Operating Cash Flow | 10.8 | 13.5 | 20.6 | 14.4 | 12.8 | −23% | $95 | +31.0% |
| EV/FCFFEnterprise Value to Free Cash Flow to Firm | 18.9 | 23.2 | 33.7 | 25.8 | 21.4 | −23% | $94 | +29.7% |
| EV/ICEnterprise Value to Invested Capital | 3.1 | 3.8 | 5.4 | 3.5 | 2.9 | −15% | $88 | +21.4% |
Industry and country are medians, not means — an average multiple over a set containing a single 4,000× outlier describes the outlier rather than the set. The implied price re-rates the share directly — price × (benchmark ÷ current) — and deducts no net debt, for any ratio. On the EV multiples that is a stated simplification of the engine, not an oversight, and it flatters a company carrying debt.
Cheaper than 60%+ of its sector on every one of the twelve. The basis column is the period each figure is computed on — mixing TTM and MRQ silently is what makes most ratio tables untrustworthy.
The discount rate, as arithmetic
Equity cash flows are discounted at the cost of equity; firm cash flows at WACC. The DCF uses an enterprise template, so 9.20% is the rate applied.
| Term | Method | Window | Value |
|---|---|---|---|
| Raw beta | Own regression against a broad index | 5y monthly | 1.63 |
| Blume-adjusted beta | ⅔ raw + ⅓ market | 5y monthly | 1.42 |
| Bottom-up beta | Sector unlevered, relevered at current structure | cross-check | 1.31 |
| Risk-free rate | Treasury constant maturity | 10y tenor | 4.65% |
| Equity risk premium | Implied ERP, monthly series | as of 31 Aug 2026 | 4.37% |
| Cost of debt | Interest expense ÷ average debt, tax-adjusted | FY2026 | 4.93% |
The headline beta is Blume-adjusted: two-thirds raw regression, one-third market. The bottom-up figure is carried as a cross-check and is not used in the rate.
Income statement
| USD | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Revenue | 27.5B | 29.8B | 30.4B | 31.0B | 31.8B |
| Cost of revenue | −14.1B | −15.2B | −15.7B | −16.6B | −17.2B |
| Gross profit | 13.4B | 14.6B | 14.7B | 14.4B | 14.6B |
| Sales & marketing | −2.3B | −2.4B | −2.3B | −2.2B | −2.2B |
| Technology & development | −3.0B | −3.0B | −2.9B | −2.8B | −2.8B |
| General & administrative | −2.1B | −2.1B | −2.0B | −2.0B | −1.9B |
| Restructuring | −0.2B | −0.1B | −0.2B | −0.1B | −0.1B |
| Operating income | 3.8B | 5.0B | 5.3B | 5.5B | 5.9B |
| Interest & other, net | −0.2B | 0.1B | 0.2B | 0.3B | 0.3B |
| Income before tax | 3.6B | 5.1B | 5.5B | 5.8B | 6.2B |
| Income tax | −1.1B | −1.3B | −1.4B | −1.5B | −2.0B |
| Net income | 2.4B | 3.8B | 4.1B | 4.3B | 4.2B |
| Diluted EPS | $2.09 | $3.42 | $3.82 | $4.10 | $4.10 |
Ten fiscal years on Plus; five shown, the rest one scroll away. Full history on Unlimited.
Full history, as far as the data goes; five fiscal years shown, the rest one scroll away.
Balance sheet
| USD | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Cash & equivalents | 7.8B | 9.1B | 10.4B | 12.6B | 16.2B |
| Short-term investments | 3.0B | 4.2B | 4.8B | 5.1B | 5.4B |
| Receivables | 1.1B | 1.2B | 1.3B | 1.4B | 1.5B |
| Total current assets | 57.5B | 60.1B | 62.9B | 66.2B | 70.4B |
| Goodwill & intangibles | 12.4B | 12.1B | 11.8B | 11.5B | 11.2B |
| Total assets | 78.7B | 82.2B | 85.1B | 88.6B | 92.4B |
| Total current liabilities | 45.1B | 46.9B | 48.4B | 50.1B | 52.2B |
| Long-term debt | 10.4B | 10.6B | 11.1B | 11.6B | 12.0B |
| Total liabilities | 58.5B | 60.9B | 63.2B | 65.6B | 70.6B |
| Total equity | 20.2B | 21.3B | 21.9B | 23.0B | 21.8B |
Cash flow
| USD | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Cash from operations | 5.8B | 6.0B | 6.3B | 6.5B | 6.5B |
| Capital expenditure | −0.7B | −0.7B | −0.6B | −0.6B | −0.6B |
| Free cash flow | 5.1B | 5.3B | 5.7B | 5.9B | 5.9B |
| Share repurchases | −4.2B | −5.0B | −5.4B | −6.0B | −6.1B |
| Acquisitions, net | −0.1B | −0.0B | −0.2B | −0.1B | −0.0B |
| Net change in cash | 0.4B | 1.3B | 1.3B | 2.2B | 3.6B |
Wall Street estimates
| Fiscal year | Revenue | Growth | EPS | EPS growth | Analysts |
|---|---|---|---|---|---|
| 2027 | 33.8B | +6.3% | $4.62 | +12.7% | 34 |
| 2028 | 36.0B | +6.5% | $5.28 | +14.3% | 31 |
| 2029 | 38.3B | +6.4% | $6.01 | +13.8% | 22 |
| 2030 | 40.7B | +6.3% | $6.84 | +13.8% | 11 |
Our forecast of 6.4% revenue CAGR sits inside the consensus band and below the five-year historical rate — the DCF is not carried by an above-street assumption.
Consensus implies +32%. Shown as a reference point, never blended into the score — an analyst target is an opinion, not a model.
Margins and returns
| USD | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Gross margin | 48.7% | 49.0% | 48.4% | 46.5% | 45.9% |
| Operating margin | 13.8% | 16.8% | 17.4% | 17.7% | 18.6% |
| Net margin | 8.7% | 12.8% | 13.5% | 13.9% | 13.2% |
| FCF margin | 18.5% | 17.8% | 18.8% | 19.0% | 18.6% |
| Return on equity | 11.9% | 17.8% | 18.7% | 18.7% | 19.3% |
| Return on invested capital | 10.4% | 14.1% | 14.9% | 15.4% | 16.1% |
Gross margin has compressed 280 bps in three years as unbranded volume grew faster than branded; operating margin still expanded, because operating expense grew slower than revenue every year.
Earnings waterfall
Balance-sheet strength
Debt maturity
Weighted average coupon 4.93%, weighted average maturity 7.2 years. Every maturity inside the forecast is covered by a single year of free cash flow.
Corporate insiders
Institutions
Politicians
Full filing history on every cohort, with the lag on each row.
Retail is the only cohort net-selling. Every disclosure carries the lag between the trade and the filing — a 13F is a photograph up to 45 days old.
PYPL · Q4 FY26 — beat, raised, one unanswered question
- Guidance up. FY27 revenue growth 6–7% (was 4–5%); operating margin +90 bps.
- Dodged. Asked twice about branded checkout share after the pricing change — “stable engagement”, no number. Flagged as unquantified.
- Model change. Years 1–2 growth 5.1% → 6.4%. Blended value $109 → $118. Score 87 → 91.
Every change is versioned and traceable to the sentence in the transcript that caused it.
| Quarter | Tone | Surprise | Dodged |
|---|---|---|---|
| Q4 FY2624 Oct 2026 | Confident | +4.2% | 1 |
| Q3 FY2629 Jul 2026 | Measured | +2.1% | 0 |
| Q2 FY2628 Apr 2026 | Defensive | −0.8% | 3 |
| Q1 FY2604 Feb 2026 | Confident | +5.6% | 1 |
PayPal and OpenAI sign multi-year agentic-commerce deal
Checkout inside ChatGPT from Q1 FY27, with PayPal as a launch wallet. Revenue share is not disclosed in any filing and is excluded from the model until guidance quantifies it.
Venmo monthly actives cross 100 million
Disclosed at the investor day rather than in a filing. Take-rate on the cohort is unchanged, so the effect on the model is volume, not mix.
Regulator opens review of buy-now-pay-later disclosures
Industry-wide and pre-decisional. No named respondent. Held out of the risk model until a company is named.
A story enters the model only when a filing quantifies it. The OpenAI agreement is material and is not in the forecast, because no filing states the revenue share. That is a stated exclusion rather than an oversight — and when guidance quantifies it, the change appears in the model-delta table with the sentence that caused it.
Capital returns
Shares retired
| Fiscal year | Repurchased | Shares out | Change |
|---|---|---|---|
| FY2022 | $4.2B | 1.25B | — |
| FY2023 | $5.0B | 1.18B | -5.6% |
| FY2024 | $5.4B | 1.12B | -5.1% |
| FY2025 | $6.0B | 1.07B | -4.5% |
| FY2026 | $6.1B | 1.02B | -4.7% |
The float has fallen 18.4% in five years. At the current pace the remaining authorisation lasts roughly 18 months.
Design preview: illustrative figures throughout, invented and tied to no live run and no real company’s accounts. Analysis is not advice and nothing here is a recommendation to buy or sell any security.
Insider, fund and congressional disclosures are shown with the lag between transaction and filing, because that lag is part of what a row means. Valuations are model output under stated conventions, reproducible only from a run’s own recorded inputs, version and vintage.