PayPal Q1 earnings: ‘we own it because it’s cheap’

Shares of PayPal Holdings Inc (NASDAQ: PYPL) are trading down in extended hours even though the digital payments company reported market-beating results for its fiscal first quarter.

Is it an opportunity to buy PayPal stock?

The price action is all the more intriguing considering executives raised guidance as well.

PayPal now sees high-single-digit growth in its revenue this year on $4.95 of adjusted per-share earnings. In comparison, analysts were at $4.89 a share.

The post-earnings reaction may be an opportunity to buy PayPal stock if you’re in the same league as Karen Firestone of Aureus Asset Management.

PayPal shares are trading at a discount

CEO Dan Schulman attributed the encouraging outlook partially to better-than-expected strength in eCommerce.

Total payment volume was $354.5 billion in the recently concluded quarter – well ahead of expectations. In a recent CNBC interview, Firestone said:

Earlier this year, the financial technology company undertook cost savings initiatives, including lowering its headcount by 7.0%.

Notable figures in PayPal Q1 earnings report

• Net income printed at $795 million versus the year-ago $509 million
• Per-share earnings also climbed significantly from 43 cents to 70 cents
• Adjusted EPS came in at $1.17 as per the earnings press release
• Revenue went up about 9.0% on a year-over-year basis to $7.04 billion
• FactSet consensus was $1.10 a share on $6.98 billion in revenue

PayPal stock is down 4.0% for the year at writing.