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How Does PayPal’s Profitability Ratio Look?

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Profitability ratio

PayPal’s (PYPL) TTM (trailing-12-month) gross margin stands at 46.20% compared to the industry and sector average of 42.06% and 40.92%, respectively. Its five-year gross margin is 30.78%. PayPal’s TTM operating margin is 14.19%, whereas the industry and sector averages are 10.62% and 15.94%, respectively.

PayPal’s TTM net profit margin is 12.82% compared to the industry and sector average of 3.16% and 12.52%, respectively. Peers eBay (EBAY), Square (SQ), Yelp (YELP), and Baidu (BIDU) have TTM net profit margins of 81.12%, -4.13%, 18.04%, and 26.54%, respectively.

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The TTM EBITDA margin stands at 20.98%, while the pre-tax margin for the trailing 12 months comes in at 14.58% compared to the industry average of 11.04%. PayPal’s effective tax rate for the trailing 12 months totals 12.02% compared to the industry average of 28.99%. All the ratios are above the industry average and look like a good buy.

Growth rates

In its most recent quarter, PayPal’s sales rose 18.34% YoY, while the industry’s sales grew 18.59% YoY, and the sector’s grew 19.78% YoY. PayPal’s EPS grew 27.25% YoY in the most recent quarter, while the industry’s grew 36.22% YoY.

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Efficiency

PayPal’s TTM revenue-to-employee ratio is 649,668x, and the industry and sector averages are 31,319,156x and 5,740,986x, respectively. Meanwhile, its TTM net-income-to-employee ratio is 83,315x, and the industry and sector averages are 5,783,981x and 611,469x. PayPal’s TTM asset turnover ratio is 0.36x.

Management’s effectiveness

PayPal’s TTM ROA (return on assets) ratio is 4.58x, while the industry and sector averages are 11.38x and 10.71x, respectively. PayPal’s TTM ROI (return on investment) ratio is 9.41x, and its TTM return-on-equity ratio is 10.47x. These ratios, on the other hand, are below the industry average.

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