2 weeks Ago By Simply Wall St.
While it may not be enough for some shareholders, we think it is good to see the ( ) share price up 21% in a single quarter. But that is meagre solace in the face of the shocking decline over three years. In that time the share price has melted like a snowball in the desert, down 73%.
So it's about time shareholders saw some gains. Of course the real question is whether the business can sustain a turnaround. On a more encouraging note the company has added US$3.
0b to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders. While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Although the share price is down over three years, PayPal Holdings actually managed to grow EPS by 1.5% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain).
Alternatively, growth expectations may have been unreasonable in the past. It's pretty reasonable to suspect the market was previously to bullish on the stock, and has since moderated expectations. However, taking a look at other business metrics might shed a bit more light on the share price action.
Revenue is actually up 8.4% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating PayPal Holdings further; while we may be missing something on this analysis, there might also be an opportunity.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers). PayPal Holdings is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling PayPal Holdings stock, you should check out this .
PayPal Holdings provided a TSR of 15% over the last twelve months. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 6% per year, over five years.
So this might be a sign the business has turned its fortunes around. Before spending more time on PayPal Holdings If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this.
