Looking for the best stocks to invest in? This in-depth stock analysis of PayPal Holdings (NASDAQ: PYPL) uses a Discounted Cash Flow (DCF) model to forecast potential returns under Bear, Base, and Bull case scenarios. Whether you’re investing in stocks for long-term growth or building a portfolio of top growth stocks, this report highlights why PYPL could be one of the most promising stocks to invest in right now. Also included is a look at PayPal’s free cash flow and dividend sustainability, essential insights for smart investors.
All figures are in millions of USD unless otherwise stated.
I. DCF Valuation — Bear Case
EBITDA Growth Rate: 2%
Terminal Growth Rate: 1.5%
Discount Rate: 9%
Sum of PV of UFCF (2024–2029): $21,206
Terminal Value (TV): $76,644
PV of Terminal Value: $49,813
Enterprise Value (EV): $71,020
Net Debt: -$4,407
Equity Value: $75,427
Shares Outstanding: 995M
Intrinsic Value per Share: $75.81
II. DCF Valuation — Base Case
EBITDA Growth Rate: 4%
Terminal Growth Rate: 2.5%
Discount Rate: 7.5%
Sum of PV of UFCF (2024–2029): $23,497
Terminal Value (TV): $129,317
PV of Terminal Value: $90,077
Enterprise Value (EV): $113,574
Net Debt: -$4,407
Equity Value: $117,981
Shares Outstanding: 995M
Intrinsic Value per Share: $118.57
III. DCF Valuation — Bull Case
EBITDA Growth Rate: 6%
Terminal Growth Rate: 3.5%
Discount Rate: 6.5%
Sum of PV of UFCF (2024–2029): $25,707
Terminal Value (TV): $241,655
PV of Terminal Value: $176,379
Enterprise Value (EV): $202,086
Net Debt: -$4,407
Equity Value: $206,493
Shares Outstanding: 995M
Intrinsic Value per Share: $207.53
IV. Valuation Summary and Upside Potential
Current Price: $70.05
Bear Case Intrinsic Value: $75.81 → 8% upside
Base Case Intrinsic Value: $118.57 → 69% upside
Bull Case Intrinsic Value: $207.53 → 196% upside
V. Dividend Sustainability Analysis
Dividend per Share: $0.00
Shares Outstanding: 995M
Total Dividends Paid: $0
Free Cash Flow (Used for Analysis): $5,968M
Dividend Payout Ratio (FCF Basis):
$0 / $5,968 = 0.00 or 0%
Assessment:
No dividends are being paid at present
All cash flow is retained for reinvestment or other uses
Conclusion: Dividend payments are not in practice. However, the company has ample room for initiating shareholder returns via dividends if management chooses to in the future.
VI. Summary View
This valuation is purely quantitative and based on forecasted UFCF ranges under varying macroeconomic and operational assumptions. The model shows that PayPal is undervalued under all three cases, with the strongest valuation support in the base and bull scenarios.
DCF Highlights: PYPL is trading well below its intrinsic value in all scenarios.
Dividend View: No dividends currently paid; company retains 100% of free cash flow.
Quantitative Takeaway: At $70.05, the market significantly discounts PayPal’s cash flow potential, especially under moderate to optimistic growth scenarios.
Valuation Range: $75.81 – $207.53
