Buying PayPal (NASDAQ:PYPL | PYPL Price Prediction) at 11 times trailing earnings while the company retires roughly 8% of its float every year makes PayPal stand out as one of the more compelling large-cap value opportunities today. PayPal operates digital payment platforms such as PayPal, Venmo, and Braintree, making money primarily by charging merchants fees for processing transactions.
The market is pricing PayPal like a melting ice cube, but the underlying payments engine is still compounding volume, and management is returning cash faster than the share price can absorb it. Additionally, Stripe and Advent International made an offer for PayPal’s business, and while the offer of $60.50 per share was rejected for being too low, there’s a potential for the business to be acquired at a substantial premium to where it trades today.
PayPal’s 11x Forward P/E Provides a Margin of Safety
PYPL trades at a forward P/E of just 11 against TTM revenue of $33.73 billion and a return on equity of 25.1%. It’s a rare combination for a business to generate 25% ROE while being priced at a low-double-digit multiple. Analysts’ average price target of $61.62 implies 11.01% upside before factoring in dividends or share buybacks.
An 8% Buyback Yield Acts Like An Extra Return Driver
The stock’s dividend yield of 0.74% understates what shareholders actually receive. PayPal repurchased ~100 million shares for $6.0 billion over the trailing twelve months, shrinking diluted share count from 999 million to 920 million.
Y2025 free cash flow reached $5.564 billion, and management guides to at least $6 billion in adjusted free cash flow for 2026 with another ~$6 billion in share repurchases planned.
PayPal’s $1.5 Billion Turnaround Has Teeth
New CEO Enrique Lores has committed to “at least $1.5 billion of gross run-rate savings over the next two to three years,” backed by Q1 2026 total payment volume of $463.95 billion, up 11%, and U.S. revenue growth of 9%. Venmo TPV rose 14% year over year, its sixth consecutive quarter of double-digit growth.
Why PayPal Looks Far Cheaper Than Visa
While Visa (NYSE:V) has a more attractive underlying business than PayPal, it’s tough not to see that PYPL is valued at a low multiple. Visa trades at a forward P/E of 24, roughly double PayPal’s multiple, while paying a nearly identical 0.72% dividend yield. Visa’s EV/EBITDA of 24.54 dwarfs PayPal’s 6.7. Retirement investors get comparable dividend income at a fraction of the valuation, plus a share buyback yield Visa cannot match on a percentage-of-float basis.
PayPal’s Weak Guidance Masks a Healthy Payments Engine
PayPal’s bear case rests on FY26 non-GAAP EPS guided to a low-single-digit decline to slightly positive versus $5.31. But the company’s core growth engine still looks intact, with TPV growth of 11% and transaction volume of 6.5 billion transactions, up 7%.
The near-term EPS softness reflects lower interest income on customer balances and reinvestment pressure, while underlying demand remains strong. Insiders agree: PayPal logged 59 recent insider transactions with a net buying direction.
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