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PYPL, looking sharper with higher Cashflow
Current 105 Target 163 +55%
February 18 2022
1 minute read
Sales jumped 12%
Costs up profit down
Cashflow higher
Balance sheet higher leverage
Valuation, a 55% higher target price
1 minute read
Sales jumped 12%
- Sales jumped 12% in the fourth quarter to 6,918 million dollars vs our 6,491 million dollars forecast.
- This brings the quarterly average to 3% growth.
- We predict average growth of another 3% in this next 12 months to bring sales to 7,699 million dollars in the fourth quarter of 2022.
Costs up profit down
- The cash cost ratio went from -72% to -74% profit from 1,087 to 801 million dollars in the fourth quarter.
- The average cost ratio is at -71% now.
- We use the average -71% cost ratio to predict a higher 1,452 million dollars profit in the fourth quarter of 2022.
Cashflow higher
- Free cashflow went from 1,286 to 1,550 million dollars in the fourth quarter with -213 million dollars investment spending.
- Average quarterly Cashflow is at 1,358 million dollars now.
- We assume the same -213 million dollars investment spending which with higher sales gives a 2,057 million dollars Cashflow in the fourth quarter of 2022.
Balance sheet higher leverage
- Cash declined 7,782 to 5,197 million dollars in the fourth quarter.
- Liabilities increased 52,444 to 54,076 million dollars so net cash worsened -44,662 to -48,879 million dollars.
- With our forecast cashflow & a -2,079 million dollars equity payout -5,540 million dollars liabilities payment net cash will be -43,339 million dollars in 12 months time.
Valuation, a 55% higher target price
- PYPL capital raised from the last 20 quarters improved -18,698 to -18,120 million dollars in the fourth quarter. with 908 million dollars new liabilities, a -1,486 million dollars equity payout & will be -10,501 million dollars in12 months time.
- At the current market value of 122,600 million dollars based on our forecasts it’s at 1.7 X assets with a 9 years payback & a 2% yield.
- Our cashflow forecast is 7,619 million dollars which means an 16 X valuation. A 25 X valuation gives a 55% higher target price of 163 dollars.