PayPal Holdings, Inc. PYPL is scheduled to report second-quarter 2022 results on Aug 2.

The company projects year-over-year revenue growth of 9% on a current spot rate and a currency-neutral basis for the second quarter. The Zacks Consensus Estimate for revenues is pegged at $6.76 billion, indicating an improvement of 8.3% from the prior-year quarter’s reported figure.

PayPal projects non-GAAP earnings of 86 cents per share. The Zacks Consensus Estimate for earnings is pegged at 85 per share, suggesting a decline of 26.1% from the year-ago reported figure. Further, the figure has moved 1.2% downward over the past 30 days.

Notably, the company surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missing the same once and meeting on another occasion, delivering an earnings surprise of 1.16%, on average.

PayPal Holdings, Inc. Price and EPS Surprise

PayPal Holdings, Inc. price-eps-surprise | PayPal Holdings, Inc. Quote

Factors at Play

PayPal’s persistent efforts toward strengthening the product portfolio are likely to have aided the company in gaining traction among customers in the second quarter.

The company unveiled the Synchrony-issued PayPal Cashback credit card, which offers unlimited 3% cash back when paying with PayPal at checkout, and unlimited 2% cash back on all other purchases anywhere Mastercard is accepted.

The company launched PayPal Business Cashback Mastercard — its business credit card, which offers 2% cashback on all purchases.

PayPal introduced a buy now pay later solution called PayPal Pay Monthly, which allows customers to break the total costs of their purchased item into monthly payments.

These introductions are expected to have impacted the company’s quarterly performance positively.

PYPL’s second-quarter performance is likely to have benefited from the strength in the Venmo product line, which is expected to have continued aiding customer engagement on PayPal’s platform. This is expected to have aided growth in total active accounts in the quarter under review.

However, the company’s weakening momentum in the international market is expected to have been a major headwind.

The impacts of uncertainties related to the ongoing coronavirus pandemic and foreign exchange headwinds are likely to get reflected in the second-quarter results of PayPal.

Key Metrics to Consider

Total payment volume (TPV), active customer accounts, payment transactions per active account and the total number of payment transactions are considered to be the key metrics for analyzing PayPal’s business growth.

For the second quarter, the Zacks Consensus Estimate for active customer accounts is pegged at 433 million, up 7.4% from the year-ago quarter’s reported figure.

The consensus mark for payment transactions per active user is pegged at 48.69 million, suggesting growth of 11.9% from the year-ago quarter’s reported number.

The consensus estimate for the total number of payment transactions is pinned at 5.5 billion, indicating an improvement of 16.5% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for TPV is pegged at $345.01 billion, suggesting growth of 10.9% on a year-over-year basis.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for PayPal this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PayPal has an Earnings ESP of -2.49% and a Zacks Rank #3 (Hold).

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings this season.

Aspen Technology AZPN has an Earnings ESP of +1.40% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aspen Technology is set to report fourth-quarter fiscal 2022 results on Aug 8. The Zacks Consensus Estimate for ASPN’s earnings is pegged at $2.15 per share, which suggests an increase of 40.5% from the prior-year fiscal period’s reported figure.

Keysight Technologies KEYS has an Earnings ESP of +1.23% and a Zacks Rank of 2 at present.

Keysight Technologies is scheduled to release third-quarter fiscal 2022 results on Aug 17. The Zacks Consensus Estimate for KEYS’ earnings is pegged at $1.79 per share, suggesting an increase of 16.2% from the prior-year fiscal quarter’s reported figure.

Advanced Micro Devices AMD has an Earnings ESP of +1.66% and a Zacks Rank of 3 at present.

Advanced Micro Devices is scheduled to release second-quarter 2022 results on Aug 2. The Zacks Consensus Estimate for AMD’s earnings is pegged at $1.03 per share, suggesting an increase of 63.5% from the prior-year quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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