General Dynamics vs. PayPal: With Return Forecast Of 58%, PayPal Is A Better Bet

Last Updated: 3/16/2022

We Forecast Higher Stock Return For PayPal vs. General Dynamics

General Dynamics is trading at a cheaper P/S valuation vs. PayPal but it makes sense to pay more for PayPal for a higher return

GD and PYPL have similar operating income

3-Year Return Depends On [1] Revenue Growth [2] P/S

[1] How Much Can Revenue Grow In Next 3 Years

We forecast annual revenue growth of 8.7% for GD and 13.1% for PYPL

General Dynamics Revenue vs. PayPal Revenue

[2] Which P/S Scenarios Make Sense

We forecast P/S of 1.5 for GD and 5.5 for PYPL based on below plausible scenarios

General Dynamics P/S vs. PayPal P/S

Are Current P/S Ratios Justified

A higher P/S is justified by higher margin, higher revenue growth, better margin expansion, and lower risk

P/S Ratio

Revenue Growth & Operating Margin

Financial & Market Risk

Note On P/S Justification

Past Market Return Comparison vs. Benchmarks

Since 2017, General Dynamics and PayPal returned 38% and 155% respectively vs. 90% for S&P 500 and 246% for Trefis Multi-Strategy Portfolio

 

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