PayPal Stock Looks Dirt Cheap. Time to Buy?

Core Business Performance - PayPal's core checkout business is experiencing growth challenges, with management indicating that growth in branded checkout will slow down in the fourth quarter compared to the third quarter [4][7] - The company's revenue growth has returned to mid-single-digit levels, with a 7% year-over-year increase in Q3, up from 5% in Q2, and adjusted earnings per share rising 12% to $1.34 [2][3] Engagement Metrics - Active accounts remained flat at approximately 438 million, showing only a 1% year-over-year increase, while total payment transactions declined by 5% year-over-year [4][6] - Transactions per active account on a trailing-12-month basis decreased by 6% to 57.6, indicating reduced transaction frequency among users [4][6] Market Position and Competition - The slowdown in branded checkout growth is attributed to competitive pressures from card networks and technology platforms that are enhancing their own checkout solutions [6] - Despite the challenges, PayPal's management remains optimistic about meeting fourth-quarter guidance, forecasting non-GAAP earnings per share between $1.27 and $1.31 [7] Valuation and Investment Considerations - PayPal's stock is currently trading at a low valuation of about 12 times earnings, which some investors may view as an attractive entry point [8] - The company must stabilize branded checkout growth and improve engagement metrics to regain investor confidence, especially in light of increasing competition in the payments space [8]