PayPal Holdings Inc (NASDAQ:PYPL) shares are on watch Monday afternoon, as a broad market rally lifts all major indices into positive territory. Growing optimism among investors Monday is being driven by the anticipation of key inflation data and a strong rebound across sectors after Wall Street's worst week of the year.
What's Happening: Investors are keeping a close eye on the upcoming Consumer Price Index (CPI) report, expected on Wednesday, which could indicate a further slowdown in inflation. Economists are predicting a year-over-year headline inflation rate of 2.6% for August, down from 2.9% in July.
A lower inflation reading would not only reinforce the Federal Reserve's outlook for potentially easing monetary policy but also provide a more favorable environment for growth-oriented stocks like PayPal.
PayPal, a major player in digital payments, tends to benefit from a stable macroeconomic environment, as lower inflation and a potential rate-cut cycle would reduce borrowing costs for businesses and consumers alike. This could translate to higher transaction volumes and increased revenue for the company.
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What Else: The overall financial sector also outperformed on Monday, with the Financials Select Sector SPDR Fund (XLF) rising 2%, further supporting gains in PayPal. Broader optimism across tech stocks, ahead of Apple Inc.'s highly anticipated product launch event, also contributed to market strength, lifting investor sentiment in the payments space.
Additionally, with PayPal's ongoing efforts to streamline its operations and focus on long-term profitability, investor confidence has seen a boost as the company navigates a highly competitive digital payments landscape.
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Is PYPL A Good Stock To Buy?
An investor or trader's decision to buy or sell a stock is unique to their time horizon and risk tolerance. Many typical investors evaluate earnings growth and valuation on a particular stock before making a decision.
For example, for PayPal Holdings, you'll notice that earnings in its last quarter grew 33.71% source. As an investor, you'll want to decide whether that's better or worse than what you'd like to see among stocks in your portfolio.
On the valuation side, PayPal Holdings's price to earnings ratio – a measure of how much an investor pays for the company's earnings – is compressed 55.52% in the current quarter when compared with last year. That places it below similar businesses Visa, Mastercard, Fiserv in its sector. You'll need to decide whether that makes it more or less attractive based on how you think the company will perform over time.
There are many different valuation metrics that may help you make a decision. Find more on PayPal Holdings's quote page, or if you'd like a deeper dive in an advanced program, try Benzinga PRO for free.
PYPL has a 52-week high of $74.40 and a 52-week low of $50.25.