PayPal Holdings, Inc. PYPL will report first-quarter 2017 earnings on Apr 26 after the bell.

Why a Likely Positive Surprise?

The company has a Zacks Rank #3 (Hold) and an Earnings ESP of +3.03%, a combination that increases the likelihood of a positive surprise. This is because, per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement.

Notably, PayPal’s surprise history is impressive. It surpassed estimates in two of the last four quarters and matched the same on the other two occasions, with an average positive surprise of 3.5%. In the last one year, the stock outperformed the Zacks Internet - Software industry. It gained 10% compared with the industry’s gain of 8.7%.

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Factors Worth Considering

PayPal is performing strongly in global payments, both online and mobile. It is also doing well with the Customer Champion strategy and enhancing value for customers and merchants.

The company is riding high on partnership and mobile centrism. PayPal recently partnered with Discover Financial Services to link PayPal wallet with Discover cardholders and merchants and extended its partnership with cellular carriers. It also added a number of brands such as auto. DE (Europe’s second-largest retailer), Barrel, Crate and Squarespace.

PayPal Holdings, Inc. Price, Consensus and EPS Surprise

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PayPal Holdings, Inc. Price, Consensus and EPS Surprise | PayPal Holdings, Inc. Quote

Its strategic partnerships with Visa and MasterCard offer great flexibility and choice to consumers. Partnerships with Facebook FB, Alibaba’s AliExpress, Google, Intuit and other major retailers and financial institutions are also positives.

The company is also exploring partnerships across multiple original equipment manufacturers (OEM), technology companies, mobile-carriers, retailers and financial institutions.

PayPal’s accelerated push into mobile with Venomo will bolster its stake in mobile payments. We expect this momentum to continue going forward.

PayPal expects revenues to grow 16%–18% on an Fx-neutral basis to $2.90 billion – $2.95 billion in the first quarter. Non-GAAP earnings are expected within 40 cents–42 cents.