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What to Expect When PayPal (PYPL) Reports Q3 Earnings?


PayPal Holdings, Inc. PYPL is set to report third-quarter 2016 results on Oct 20. Last quarter, the payment company posted in-line earnings.

Let’s see how things are shaping up for this announcement.

Factors to Consider

PayPal Holdings is a technology platform, which offers online payment solutions. These allow customers to pay and get paid, withdraw funds from their bank accounts and hold balances in their PayPal accounts in various currencies. Its payment platform includes PayPal, PayPal Credit, Venmo and Braintree products.

PayPal is focusing on its core capabilities and is operating with greater flexibility for success in the digital payments space. Its foray into mobile payments with the Braintree acquisition and its One Touch system reflects the same. The company has also signed a few strategic agreements, to expand the acceptance of PayPal payments system among new clients and businesses. The recent deals with Visa and MasterCard MA are expected to mitigate the growing friction between credit card companies and PayPal over online transactions as the former encroached upon the latter’s share of online payments and digital wallets.

However, intensifying competition in the payments – especially mobile – space can be a headwind for the company.

Earnings Whispers?

Our proven model does not conclusively show that PayPal will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: PayPal has an Earnings ESP of 0.00%. Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 27 cents.

Zacks Rank: PayPal has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

PAYPAL HOLDINGS Price and EPS Surprise


Stocks to Consider

Here are some companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Amazon.com, Inc. AMZN, slated to report third-quarter earnings results on Oct 27, with an Earnings ESP of +6.98% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Seagate Technology plc STX, with an Earnings ESP of +3.37% and a Zacks Rank #2. The company is slated to report first-quarter fiscal 2017 earnings results before the market opens on Oct 19.

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