Click To Buy Or Click To Sell: The PayPal Question

Payments processing companies are a dime a dozen, but PayPal remains the most widely respected and universally popular payments option. In recent years, PayPal has upgraded its payment/receipts services to allow individuals and companies to effectively, efficiently and securely transfer funds to buyers, suppliers, customers and banks. Such is the appeal of PayPal that it is ranked as the #1 most recognisable online payments brand in the world. PayPal Holdings Inc (PYPL) has a market capitalisation of $43.86 billion and a price-earnings ratio of 35.87. The earnings per share (EPS) is 1.00.

PayPal Bullish Engulfing Pattern

There has been widespread discussion about whether to buy or sell PayPal given the recent earnings reports. At the end of January 2016, PayPal released its Q4 earnings of $0.36 p/s with sales of $2.6 billion. The consensus estimate was $0.35 p/s with sales in the region of $2.51 billion. PayPal also posted a Y-o-Y earnings increase of 27%. For Q1, 2016 PayPal is anticipating EPS of $0.34 – $0.36 and the EPS for the fiscal year is expected to be in the range of $1.45 – $1.50. Additionally, PayPal has planned to purchase as much as $2 billion in stocks (buybacks) to ramp up the share price and boost investor confidence in the stock.

PayPal stock is currently entering an interesting phase known as a bullish engulfing stage. It is evident from the chart that there is a slight downtrend developing and this has taken prices from over $36.50 p/s to $35.78. There is an opportunity to buy at a new low around $35.78 and the bearish momentum has all but disappeared at this point. In terms of technical analysis of PayPal Holdings Inc (PYPL) we can draw the following conclusions:

Technical Indicators including: RSI, STOCH, MACD, ADX, Williams%R, Ultimate Oscillator and Bull/Bear, PayPal ranks as astrong buy