PYPL is undervalued and a buy; low P/FCF multiple, improving ROIC, and share buybacks provide margin of safety against competition.

Now, company number three, " PayPal". Guys, they own Venmo, Braintree, and huge business services that move hundreds of billions of dollars around the world. The stock has been declining for years, but the free cash flow is real and management continues to repurchase shares.

Their new CEO, Enrique Lores , took office about 6 months ago and is trying to streamline the entire company.

So, what are the positive expectations? Well, there is new talk of a takeover by a new buyer after previous talks reportedly centered on $60.50 per share. PayPal also raised its earnings guidance for this year.

Due to the negative outlook, Stripe withdrew from the deal, and in the last quarter sales grew by 5%, but operating profit fell by 8%.

So, let's take a look at this amazing thing. Well, I'm not worried about the market value and the value of the company because of all the cash they hold. That's all money owed to people abroad.

So, this is not a major concern for me. What I like is that their return on capital continues to improve . Guys, it was 9%, it was 8%, it was 10%, it was 11%. Now, their return on capital last year was 14.5%, bringing their 5- year average to 12.3%.

Hey guys , look at this. Their free cash flow was $6.6 billion last year, compared to $5.3 billion. They are sold for seven times the free cash flow . seven. Seven times the free cash flow. I mean, guys, there's a lot of potential here.

Let's examine our eight pillars. Exciting the eight pillars. Long-term commitments are reasonable. Look at this, they are buying back 24% of these shares. They have repurchased a quarter of the company in the past five years, and the business's free cash flow has improved .

Therefore, as a shareholder, you receive a larger share of their free cash flow, which they have successfully grown . This is a company that recognizes situations where stocks are undervalued.

Next, let's take a look at the analysts' estimates. Well, analysts expect their profits to rise from 5.38 this year to 7.58. Again , at a price-to-earnings ratio of 20, the share price reaches $150.

Do you understand why, when the price was $300, we said, "Yes, we are not interested in this company." When the price reached $40, we said, "Yes, we are very interested in this company."

Again, assuming they are right. But even if they are wrong, there is a large margin of safety here.

Guys , look at this revenue growth. It's not huge, but it's still there . 4%, 4.6%, 3.75%, 7.79%. So, they already have competition. They will have slow growth, but they are smarter in dealing with that growth. That's what I like about them .

So, let's run a stock analysis tool to see the company's value based on our own assumptions. I conducted a ten-year analysis, with revenue growth rates of 3%, 5%, and 7%. Their free cash flow is higher than their profit margin, so I will focus on their free cash flow.

I chose percentages of 14%, 17% and 20%. Guys, keep in mind that they achieved 19.3% last year, and 19.3% for the past ten years , and I'm still setting my average assumption at 17 %.

Regarding the price-to- earnings ratio, I chose a lower ratio here even though the return on capital is improving. I chose 14, 16 and 18, which I probably shouldn't have done. Perhaps I should have increased my margin of safety because the reason for my hesitation is that there is a lot of competition in this field.

But I accepted that and said, OK, 15, 18, and 21. What I should focus on when buying is that if I have concerns, I should increase the margin of safety, which means increasing the required return.

But for now, we will set a rate of 9.5% here for our desired return. I pressed the analyze button. The current share price is $53 per share. I have a low price between 75 and 80, a high price between 150 and 190, and an average price between 110 and 126, which shows an average return of 23%.

Hey guys, I want you to know one thing. When Stripe made the offer at $60 per share, while the share price was $40, I was furious. I said to myself, this company is worth much more than $60 per share.

Don't let Stripe buy it for $60 a share. I believe the value of this company today is between $120 and $130, as you can see in my figures here.