PYPL
PayPal Holdings, Inc.
Financial Services · Credit Services · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Strong profitability and earnings acceleration — including a 25.8% ROE and +35.6% EPS growth — drove solid scores in the growth and profitability factors, anchoring the 65.0/100 composite [profitability.roe_pct][growth.eps_diluted.yoy].
- The dividend factor scored at the maximum, rewarding PayPal's very low 2.5% payout ratio as a signal of capital discipline and reinvestment capacity [dividend.payout_ratio].
- The theme factor scoring zero and the moderate revenue growth rate tempered what would otherwise be a higher composite, resulting in a Medium risk, Research Candidate designation [theme.assigned][growth.revenue.yoy].
Why Not Higher
- The theme factor scored zero despite PayPal's assignment to Digital Payments & Fintech Infrastructure, which structurally weighed on the composite score [theme.assigned].
- Revenue growth of only +4.3% and a visible 2026Q1 softening in both revenue and net income prevented higher momentum and growth scores [growth.revenue.yoy][momentum.revenue_quarterly][momentum.net_income_quarterly].
Data Confidence
9 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew +4.3% from FY2024 to FY2025 (from $31,797,000,000 to $33,172,000,000), while net income rose +26.2% over the same period (from $4,147,000,000 to $5,233,000,000), and diluted EPS expanded +35.6% from FY2024 to FY2025 (from $3.99 to $5.41).
The model rewarded the strong bottom-line and per-share acceleration relative to the more modest top-line gain, reflecting that profitability is growing meaningfully faster than revenue — a pattern the model treats as a positive quality signal, though the moderate revenue growth rate tempers the overall score.
In FY2025, PayPal posted a net margin of 15.8%, an operating margin of 18.3%, and a return on equity of 25.8%.
The model rewarded these solid margin and return figures — particularly the 25.8% ROE in FY2025, which signals efficient use of shareholder capital — while the score stopping short of the maximum likely reflects the model's benchmarking against higher-margin peers in the fintech sector.
Filing evidence currently available does not support a more specific explanation for this factor.
Quarterly revenue showed a general upward trend from 2025Q2 ($8,288,000,000) through 2025Q4 ($8,676,000,000) before pulling back in 2026Q1 ($8,353,000,000). Operating income remained notably stable across the four quarters — ranging from $1,488,000,000 in 2026Q1 to $1,520,000,000 in 2025Q3 — while net income dipped from $1,437,000,000 in 2025Q4 to $1,113,000,000 in 2026Q1.
The model credited the broadly constructive revenue trajectory and the consistency of operating income, but the 2026Q1 softness in both revenue and net income introduced a note of deceleration that likely prevented a higher score.
PayPal's dividend payout ratio in FY2025 was 2.5% of net income.
The model appears to reward a very low payout ratio as a signal that the company retains the vast majority of its earnings for reinvestment or buybacks, treating capital discipline favorably — and the near-zero payout ratio in FY2025 earned the maximum score under this methodology.
PayPal is assigned to the macro theme of Digital Payments & Fintech Infrastructure.
While the Digital Payments & Fintech Infrastructure theme is assigned to PayPal, this assignment did not translate into a positive score under the model's current methodology — the theme factor score of 0.0 reflects the model's scoring outcome rather than any absence of thematic relevance.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
PayPal Holdings delivered meaningful bottom-line acceleration in FY2025, with net income rising +26.2% and diluted EPS expanding +35.6% even as revenue grew a more modest +4.3% to $33,172,000,000 [growth.revenue.yoy][growth.net_income.yoy][growth.eps_diluted.yoy]. Profitability metrics are solid, with a 15.8% net margin, 18.3% operating margin, and 25.8% return on equity in FY2025 [profitability.net_margin_pct][profitability.operating_margin_pct][profitability.roe_pct]. Recent quarterly momentum shows broadly constructive revenue trends but a notable softening in 2026Q1 across both revenue and net income [momentum.revenue_quarterly][momentum.net_income_quarterly]. The company retains the vast majority of its earnings — paying out only 2.5% of net income as dividends — signaling strong capital discipline, while the theme factor scored zero, which weighed on the composite total score of 65.0/100 [dividend.payout_ratio][theme.assigned].
Plain English
PayPal is making significantly more profit per dollar of revenue than it used to, and it keeps almost all of its earnings rather than paying them out as dividends — but its revenue growth is only moderate and its most recent quarter showed some slowdown, landing it a medium-risk research candidate score [growth.eps_diluted.yoy][dividend.payout_ratio][momentum.revenue_quarterly].
Bull Case vs. Bear Case
Bull Case
- Earnings power is accelerating well ahead of revenue: net income grew +26.2% and diluted EPS grew +35.6% in FY2025, suggesting meaningful operating leverage and efficiency gains [growth.net_income.yoy][growth.eps_diluted.yoy].
- Return on equity of 25.8% in FY2025 indicates that PayPal is generating strong returns on shareholder capital, a hallmark of a competitively advantaged business [profitability.roe_pct].
- A dividend payout ratio of just 2.5% of net income in FY2025 means the company retains the overwhelming majority of its earnings for reinvestment or buybacks, reflecting disciplined capital allocation [dividend.payout_ratio].
Bear Case
- Revenue growth of only +4.3% in FY2025 is relatively modest, and the 2026Q1 quarterly revenue of $8,353,000,000 represents a pullback from the 2025Q4 peak of $8,676,000,000, introducing a deceleration concern [growth.revenue.yoy][momentum.revenue_quarterly].
- Net income dropped from $1,437,000,000 in 2025Q4 to $1,113,000,000 in 2026Q1, a meaningful sequential decline that raises questions about near-term earnings sustainability [momentum.net_income_quarterly].
- The macro theme of Digital Payments & Fintech Infrastructure scored zero under the model's current methodology, which weighed on the composite score despite PayPal's clear thematic relevance [theme.assigned].
What Could Change the Picture
Bullish Triggers
- A sustained re-acceleration in quarterly revenue growth — reversing the 2026Q1 pullback — combined with continued operating income stability would strengthen the momentum picture [momentum.revenue_quarterly][momentum.operating_income_quarterly].
- Further expansion of net margin beyond the current 15.8% would signal that profitability gains are durable and not just a one-time event [profitability.net_margin_pct].
Bearish Triggers
- If the 2026Q1 net income decline of $1,113,000,000 proves to be the start of a sustained earnings deterioration rather than a seasonal dip, the bull case for earnings leverage would weaken significantly [momentum.net_income_quarterly].
- Continued modest top-line growth below the pace of fintech peers would suggest PayPal is losing competitive ground, undermining the profitability story over time [growth.revenue.yoy].
Risk Profile
Medium RiskThe 2026Q1 quarter showed a pullback in revenue to $8,353,000,000 from a 2025Q4 high of $8,676,000,000, and net income declined to $1,113,000,000 from $1,437,000,000 in the prior quarter, introducing near-term execution uncertainty [momentum.revenue_quarterly][momentum.net_income_quarterly]. Operating income remained relatively stable across the four most recent quarters — ranging from $1,488,000,000 to $1,520,000,000 — which provides some offset, but the overall picture warrants a Medium risk rating [momentum.operating_income_quarterly].
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.