PayPal Trades at an 11x P/E and Repurchases 8% of Shares Annually. Should You Buy Before July 28 Q2 Earnings?

PYPL trades at 11x earnings with a 25% ROE while buying back ~8% of its float annually, making it a rare value-plus-yield setup.

Visa carries a 31x trailing P/E versus PayPal's 11x while offering investors a nearly identical 0.72% dividend yield.

Enrique Lores targets $1.5 billion in run-rate savings as Q1 2026 payment volume surged 11% to $464 billion.

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Buying PayPal (NASDAQ:PYPL) at 11 times trailing earnings while the company retires roughly 8% of its float every year makes PayPal stand out as one of the more compelling large-cap value opportunities today. PayPal operates digital payment platforms such as PayPal, Venmo, and Braintree, making money primarily by charging merchants fees for processing transactions.

The market is pricing PayPal like a melting ice cube, but the underlying payments engine is still compounding volume, and management is returning cash faster than the share price can absorb it. Additionally, Stripe and Advent International made an offer for PayPal's business, and while the offer of $60.50 per share was rejected for being too low, there's a potential for the business to be acquired at a substantial premium to where it trades today.

PYPL trades at a forward P/E of just 11 against TTM revenue of $33.73 billion and a return on equity of 25.1%. It's a rare combination for a business to generate 25% ROE while being priced at a low-double-digit multiple. Analysts' average price target of $61.62 implies 11.01% upside before factoring in dividends or share buybacks.

The stock's dividend yield of 0.74% understates what shareholders actually receive. PayPal repurchased ~100 million shares for $6.0 billion over the trailing twelve months, shrinking diluted share count from 999 million to 920 million.

Y2025 free cash flow reached $5.564 billion, and management guides to at least $6 billion in adjusted free cash flow for 2026 with another ~$6 billion in share repurchases planned.

New CEO Enrique Lores has committed to "at least $1.5 billion of gross run-rate savings over the next two to three years," backed by Q1 2026 total payment volume of $463.95 billion, up 11%, and U.S. revenue growth of 9%. Venmo TPV rose 14% year over year, its sixth consecutive quarter of double-digit growth.

While Visa (NYSE:V) has a more attractive underlying business than PayPal, it's tough not to see that PYPL is valued at a low multiple. Visa trades at a forward P/E of 24, roughly double PayPal's multiple, while paying a nearly identical 0.72% dividend yield. Visa's EV/EBITDA of 24.54 dwarfs PayPal's 6.7. Retirement investors get comparable dividend income at a fraction of the valuation, plus a share buyback yield Visa cannot match on a percentage-of-float basis.

PayPal's bear case rests on FY26 non-GAAP EPS guided to a low-single-digit decline to slightly positive versus $5.31. But the company's core growth engine still looks intact, with TPV growth of 11% and transaction volume of 6.5 billion transactions, up 7%.

The near-term EPS softness reflects lower interest income on customer balances and reinvestment pressure, while underlying demand remains strong. Insiders agree: PayPal logged 59 recent insider transactions with a net buying direction.

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