Price to Earnings (P/E)
since 2015
Calculation
PayPal Holdings Inc., P/E, long-term trends, calculation
| P/E | = | Share price1, 2, 3 | ÷ | Earnings per share1 (EPS) | EPS1 | = | Net income1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 10, 2023 | 37.79 | = | 80.80 | ÷ | 2.14 | 2.14 | = | 2,419 | ÷ | 1,131,373,298 | |
| Feb 3, 2022 | 34.73 | = | 124.30 | ÷ | 3.58 | 3.58 | = | 4,169 | ÷ | 1,165,004,913 | |
| Feb 5, 2021 | 75.10 | = | 269.44 | ÷ | 3.59 | 3.59 | = | 4,202 | ÷ | 1,171,175,760 | |
| Feb 6, 2020 | 57.19 | = | 119.89 | ÷ | 2.10 | 2.10 | = | 2,459 | ÷ | 1,172,955,485 | |
| Feb 7, 2019 | 51.82 | = | 90.85 | ÷ | 1.75 | 1.75 | = | 2,057 | ÷ | 1,173,209,367 | |
| Feb 7, 2018 | 50.54 | = | 75.59 | ÷ | 1.50 | 1.50 | = | 1,795 | ÷ | 1,200,160,405 | |
| Feb 8, 2017 | 35.24 | = | 40.88 | ÷ | 1.16 | 1.16 | = | 1,401 | ÷ | 1,207,583,234 | |
| Feb 11, 2016 | 33.37 | = | 33.52 | ÷ | 1.00 | 1.00 | = | 1,228 | ÷ | 1,222,675,902 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of PayPal Holdings Inc. Annual Report.
The financial trajectory from 2016 to 2023 is characterized by a period of aggressive valuation expansion followed by a sharp correction. Between 2016 and 2021, there was a consistent increase in both share price and earnings per share, culminating in a peak valuation in February 2021.
- Earnings Per Share (EPS) Trends
- Earnings exhibited a steady growth pattern from 1.00 in 2016 to a peak of 3.59 in 2021. While earnings remained nearly flat between 2021 and 2022, a notable decline to 2.14 occurred by February 2023, representing a significant reduction from the five-year high.
- Price-to-Earnings (P/E) Ratio Expansion
- A sustained upward trend in the P/E ratio is observed from 2016 to 2021, rising from 33.37 to 75.10. This expansion indicates that the market's valuation of the company grew at a faster rate than the actual earnings growth, reflecting heightened investor expectations.
- Valuation Contraction and Correction
- A sharp correction occurred between February 2021 and February 2022, where the P/E ratio collapsed from 75.10 to 34.73. This contraction was driven primarily by a precipitous drop in share price from 269.44 to 124.30, despite earnings remaining stable at approximately 3.58.
In the final period leading to February 2023, the P/E ratio stabilized between 34.73 and 37.79. This stabilization occurred despite a simultaneous decline in both share price and earnings per share, suggesting a return to a valuation multiple more consistent with the levels observed in 2016 and 2017.
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Comparison to Competitors
PayPal Holdings Inc., P/E, long-term trends, comparison to competitors
| PayPal Holdings Inc. | Accenture PLC | Adobe Inc. | AppLovin Corp. | Cadence Design Systems Inc. | Datadog Inc. | International Business Machines Corp. | Intuit Inc. | Microsoft Corp. | Oracle Corp. | Palantir Technologies Inc. | Palo Alto Networks Inc. | Salesforce Inc. | ServiceNow Inc. | Synopsys Inc. | Workday Inc. | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 10, 2023 | 37.79 | 22.93 | 33.15 | — | 59.70 | — | 71.56 | 57.31 | 28.34 | 26.85 | — | — | 135.68 | 284.29 | 51.76 | 1,957.29 |
| Feb 3, 2022 | 34.73 | 36.58 | 48.90 | 472.35 | 53.88 | — | 19.40 | 75.17 | 35.14 | 15.84 | — | — | 48.20 | 487.70 | 73.37 | — |
| Feb 5, 2021 | 75.10 | 28.32 | 41.69 | — | 62.89 | — | 19.30 | 49.52 | 35.04 | 16.69 | — | — | 1,204.70 | 978.49 | 55.92 | — |
| Feb 6, 2020 | 57.19 | 24.58 | 57.17 | — | 20.22 | — | 13.35 | 48.17 | 26.86 | 16.89 | — | — | 107.70 | 106.89 | 39.55 | — |
| Feb 7, 2019 | 51.82 | 24.10 | 46.11 | — | 46.59 | — | 14.25 | 46.88 | 50.00 | 45.90 | — | — | 731.11 | — | 29.60 | — |
| Feb 7, 2018 | 50.54 | 26.18 | 57.41 | — | 55.67 | — | 25.07 | 37.26 | 26.25 | 22.49 | — | — | 324.94 | — | 95.81 | — |
| Feb 8, 2017 | 35.24 | 18.07 | 46.80 | — | 40.53 | — | 14.29 | 29.60 | 26.08 | 18.53 | — | — | — | — | 33.71 | — |
| Feb 11, 2016 | 33.37 | 22.75 | 70.59 | — | 25.14 | — | 9.65 | 63.89 | 30.63 | 17.92 | — | — | — | — | 30.45 | — |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
Comparison to Sector (Software & Services)
PayPal Holdings Inc., P/E, long-term trends, comparison to sector (software & services)
| PayPal Holdings Inc. | Software & Services | |
|---|---|---|
| Feb 10, 2023 | 37.79 | 34.25 |
| Feb 3, 2022 | 34.73 | 37.62 |
| Feb 5, 2021 | 75.10 | 38.46 |
| Feb 6, 2020 | 57.19 | 28.30 |
| Feb 7, 2019 | 51.82 | 43.31 |
| Feb 7, 2018 | 50.54 | 30.27 |
| Feb 8, 2017 | 35.24 | 23.96 |
| Feb 11, 2016 | 33.37 | 23.38 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
Comparison to Industry (Information Technology)
PayPal Holdings Inc., P/E, long-term trends, comparison to industry (information technology)
| PayPal Holdings Inc. | Information Technology | |
|---|---|---|
| Feb 10, 2023 | 37.79 | 26.99 |
| Feb 3, 2022 | 34.73 | 29.75 |
| Feb 5, 2021 | 75.10 | 30.97 |
| Feb 6, 2020 | 57.19 | 23.40 |
| Feb 7, 2019 | 51.82 | 23.17 |
| Feb 7, 2018 | 50.54 | 23.55 |
| Feb 8, 2017 | 35.24 | 19.69 |
| Feb 11, 2016 | 33.37 | 16.54 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).