Price to Operating Profit (P/OP)
since 2015
Calculation
PayPal Holdings Inc., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Operating income1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 10, 2023 | 23.82 | = | 80.80 | ÷ | 3.39 | 3.39 | = | 3,837 | ÷ | 1,131,373,298 | |
| Feb 3, 2022 | 33.98 | = | 124.30 | ÷ | 3.66 | 3.66 | = | 4,262 | ÷ | 1,165,004,913 | |
| Feb 5, 2021 | 95.94 | = | 269.44 | ÷ | 2.81 | 2.81 | = | 3,289 | ÷ | 1,171,175,760 | |
| Feb 6, 2020 | 51.72 | = | 119.89 | ÷ | 2.32 | 2.32 | = | 2,719 | ÷ | 1,172,955,485 | |
| Feb 7, 2019 | 48.58 | = | 90.85 | ÷ | 1.87 | 1.87 | = | 2,194 | ÷ | 1,173,209,367 | |
| Feb 7, 2018 | 42.65 | = | 75.59 | ÷ | 1.77 | 1.77 | = | 2,127 | ÷ | 1,200,160,405 | |
| Feb 8, 2017 | 31.13 | = | 40.88 | ÷ | 1.31 | 1.31 | = | 1,586 | ÷ | 1,207,583,234 | |
| Feb 11, 2016 | 28.05 | = | 33.52 | ÷ | 1.19 | 1.19 | = | 1,461 | ÷ | 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.
An analysis of the financial metrics from 2016 to 2023 reveals a significant divergence between operational performance and market valuation, characterized by a period of aggressive expansion followed by a sharp correction.
- Operating Profit per Share Trends
- Operating profit per share demonstrated a consistent upward trajectory for the majority of the period, increasing from 1.19 USD in 2016 to a peak of 3.66 USD in 2022. This represents a steady improvement in fundamental earnings power, despite a slight contraction to 3.39 USD in 2023.
- Price to Operating Profit (P/OP) Volatility
- The P/OP ratio experienced a dramatic escalation, rising from 28.05 in 2016 to an exceptional peak of 95.94 in 2021. This surge indicates a period of extreme valuation premiums. Subsequently, a rapid devaluation occurred, with the ratio falling to 33.98 in 2022 and further to 23.82 by 2023, marking the lowest valuation multiple in the observed timeframe.
- Share Price Correlation and Decoupling
- The share price followed a parabolic trajectory, peaking at 269.44 USD in 2021. The subsequent decline to 80.80 USD by 2023 occurred while operating profits remained substantially higher than 2016 levels. This suggests that the decline in market value was driven primarily by a contraction in the valuation multiple rather than a failure in operational profitability.
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Comparison to Competitors
PayPal Holdings Inc., P/OP, long-term trends, comparison to competitors
| PayPal Holdings Inc. | Accenture PLC | Adobe Inc. | AppLovin Corp. | Cadence Design Systems Inc. | Datadog Inc. | Intuit Inc. | Microsoft Corp. | Oracle Corp. | Palantir Technologies Inc. | Palo Alto Networks Inc. | Salesforce Inc. | ServiceNow Inc. | Synopsys Inc. | Workday Inc. | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 10, 2023 | 23.82 | 16.83 | 25.85 | — | 47.21 | — | 46.05 | 24.72 | 16.51 | — | — | 357.52 | 260.27 | 43.85 | — |
| Feb 3, 2022 | 33.98 | 28.35 | 40.64 | 111.61 | 48.13 | — | 62.00 | 30.79 | 14.31 | — | — | 431.39 | 436.46 | 75.64 | — |
| Feb 5, 2021 | 95.94 | 22.21 | 51.75 | — | 57.54 | — | 41.56 | 29.30 | 12.17 | — | — | 511.08 | 583.08 | 59.90 | — |
| Feb 6, 2020 | 51.72 | 18.63 | 51.63 | — | 40.67 | — | 40.45 | 24.54 | 13.83 | — | — | 223.46 | 1,590.34 | 40.48 | — |
| Feb 7, 2019 | 48.58 | 16.75 | 42.06 | — | 40.66 | — | 37.92 | 23.63 | 12.83 | — | — | 395.31 | — | 35.54 | — |
| Feb 7, 2018 | 42.65 | 19.47 | 44.86 | — | 35.08 | — | 25.94 | 24.93 | 16.52 | — | — | 908.77 | — | 37.64 | — |
| Feb 8, 2017 | 31.13 | 15.44 | 36.62 | — | 33.61 | — | 23.33 | 21.70 | 13.09 | — | — | 411.51 | — | 28.34 | — |
| Feb 11, 2016 | 28.05 | 15.66 | 49.21 | — | 22.23 | — | 31.60 | 20.57 | 12.84 | — | — | — | — | 25.82 | — |
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).