PayPal Holdings, Inc. (PYPL) Stock Analysis — Fair Value, Risk & Moat Rating
NMS · Financial Services · Credit Services
Is PayPal Holdings, Inc. a safe investment right now?
PayPal Holdings, Inc.'s Altman Z-Score of 1.38 places it in the distress zone. Our DCF model estimates intrinsic value at $79.01, suggesting the stock may be undervalued by 35%. Moat rating: 2.7/5 stars.
Could PayPal Holdings, Inc. go bankrupt? Altman Z-Score analysis
Z-Score of 1.38 falls below the 1.8 distress threshold, indicating significant financial stress.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives PYPL's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | 0.1615 | 1.2 | 0.19 |
| B · Retained Earnings / Total Assets | RE / TA | 0.3474 | 1.4 | 0.49 |
| C · EBIT / Total Assets | EBIT / TA | 0.0639 | 3.3 | 0.21 |
| D · Market Cap / Total Liabilities | MCap / TL | 0.8125 | 0.6 | 0.49 |
| E · Revenue / Total Assets | Rev / TA | 0 | 1.0 | 0.0 |
How has PYPL's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2016 | 2.35 | Gray |
| 2017 | 2.1 | Gray |
| 2018 | 1.96 | Gray |
| 2019 | 1.87 | Gray |
| 2020 | 1.47 | Distress |
| 2021 | 1.15 | Distress |
| 2022 | 1.13 | Distress |
| 2023 | 1.19 | Distress |
| 2024 | 1.22 | Distress |
| 2025 | 1.38 | Distress |
Source: Calculated from PYPL's latest 10-K filing on SEC EDGAR.
What is PayPal Holdings, Inc. actually worth?
Fair value range: $52.31 — $101.27
Valuation Methods
| Method | Fair Value | Weight | Detail |
|---|---|---|---|
| Historical PE × Forward EPS | $101.27 | 50% | 17.4x avg PE (4 years) × $5.82 forward EPS |
| DCF (Discounted Cash Flow) | $52.31 | 30% | Two-stage DCF: $3.3B TTM FCF, 5.1% growth, 10.4% WACC |
| EV/FCF Multiple | $63.43 | 20% | TTM FCF × 18x multiple + net cash |
Assumptions & Data Sources
| Parameter | Value | Source |
|---|---|---|
| FCF Growth Rate (Stage 1) | 5.1% | 70% analyst consensus + 30% historical |
| Analyst EPS Growth (This Year) | 0.3% | Consensus (33 analysts) |
| Analyst EPS Growth (Next Year) | 9.2% | Consensus |
| Historical 5Y FCF CAGR | 5.8% | SEC EDGAR |
| Terminal Growth Rate | 2.5% | Long-term GDP proxy |
| Discount Rate (WACC) | 10.4% | CAPM (Rf=4.3% + 1.41*5.5%) |
| Net Cash / (Debt) | $-1,874M | Balance sheet |
| Base FCF (TTM) | $3.3B | Trailing 12 months |
| Shares Outstanding | 899,673,971 | Latest |
Sensitivity Analysis
| Growth Rate | 8% WACC | 10% WACC | 10.4% WACC | 13% WACC |
|---|---|---|---|---|
| 0% | $58.59 | $43.29 | $41.16 | $31.24 |
| 2.5% | $67.82 | $49.74 | $47.22 | $35.53 |
| 5.0% | $78.42 | $57.10 | $54.14 | $40.40 |
| 7.5% | $92.89 | $66.98 | $63.39 | $46.79 |
Free Cash Flow History
| Year | FCF | Growth |
|---|---|---|
| 2016 | $1.7B | — |
| 2017 | $1.8B | +5.6% |
| 2018 | $2.5B | +36.5% |
| 2019 | $1.9B | +-25.1% |
| 2020 | $4.7B | +149.8% |
| 2021 | $3.4B | +-27.7% |
| 2022 | $5.4B | +59.0% |
| 2023 | $4.9B | +-8.7% |
| 2024 | $5.1B | +4.5% |
| 2025 | $4.2B | +-17.4% |
Source: FCF data from SEC EDGAR filings. Price via Yahoo Finance.
Does PayPal Holdings, Inc. have a durable competitive advantage?
Moat rating: 2.7/5.
What makes up PYPL's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 3/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 3/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 2/5.
How stable is PYPL's return on invested capital?
| Year | ROIC | Trend |
|---|---|---|
| 2016 | 8.3% | — |
| 2017 | 9.0% | Stable |
| 2018 | 8.8% | Stable |
| 2019 | 12.2% | Rising |
| 2020 | 9.0% | Declining |
| 2021 | 8.5% | Stable |
| 2022 | 10.0% | Rising |
| 2023 | 12.7% | Rising |
| 2024 | 11.4% | Declining |
| 2025 | 15.1% | Rising |
Source: ROIC calculated from SEC EDGAR filings.
Is PayPal Holdings, Inc.'s dividend safe?
Can PayPal Holdings, Inc. afford its dividend?
Payout ratio is 2.6%. FCF covers the dividend 0.0x. 2 consecutive years of payments.
PayPal Holdings, Inc.'s key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $13.1B | $10.8B | N/A | — |
| Net Income | $4.2B | $2.4B | $4.2B | Stable |
| Free Cash Flow | $4.2B | $5.1B | $5.4B | Declining |
Common questions about PayPal Holdings, Inc.
Is PayPal Holdings, Inc. at risk of going bankrupt?
PayPal Holdings, Inc.'s Altman Z-Score of 1.38 places it in the distress zone. This metric uses balance sheet ratios to predict bankruptcy probability within 2 years. A score below 1.8 signals distress, while above 3.0 indicates safety.
What is PayPal Holdings, Inc.'s intrinsic value based on DCF?
Our DCF model estimates PayPal Holdings, Inc.'s intrinsic value at $79.01 per share. The current margin of safety is 34.9%. This estimate is based on historical free cash flow trends and a risk-adjusted discount rate.
Does PayPal Holdings, Inc. have a competitive moat?
PayPal Holdings, Inc. receives a moat rating of 2.7 out of 5 stars, based on ROIC stability, gross margin trends, and estimated switching costs. A rating above 3.5 suggests a durable competitive advantage.
Is PayPal Holdings, Inc.'s dividend safe?
Our dividend safety analysis examines payout ratio, free cash flow coverage, and the company's streak of consecutive dividend payments to determine whether the current payout is sustainable.
Before you invest in PayPal Holdings, Inc., make sure you truly understand it.
A deep understanding of a company's fundamentals, risk profile, and competitive position dramatically increases your investment accuracy and odds of success.
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FairValueLabs Disclaimer
All valuations, scores, ratings, and classifications on this page are produced by the FairValueLabs internal valuation system. They do not represent actual market value, guaranteed outcomes, or professional investment advice. These are analytical estimates for educational and research purposes only.
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 20, 2026. Data sources: SEC EDGAR (financial statements), Yahoo Finance (market data, analyst consensus). Data may not reflect the most recent quarter.
PYPL analysis methodology: How we calculate fair value, Z-Scores, and moat ratings