Market Minute: Bite-Size Earnings: PYPL, MCD

PayPal (PYPL) is down in the premarket after its 3Q earnings report, where EPS of $1.20 beat estimates but revenue of $7.85 billion missed despite being a 6% year-over-year growth. Total payment volume jumped 9% to $422.6 billion dollars in the quarter, with transaction and credit losses of $508 million, or about 0.1% of that volume. 

Payment transactions were 6.6 billion, averaging to 61.4 per active account, a 9% growth per user. PayPal is showing stickiness with its still-growing consumer base but is still looking to expand its commerce offerings and wants to drive higher profit. Buy Now, Pay Later offerings are seeing a 15%-20% growth according to its CEO. Year-to-date before the opening bell, the stock is up 36%. 

McDonald’s (MCD), despite being in the news with e. Coli, won’t see any impact there until next report. The stock is also down premarket, and after its recent drop from all-time highs it is about flat year-to-date. EPS of $3.24 and revenue of $6.9 billion both beat estimates. 

Comparable sales in the quarter were down 1.5%, with international markets taking the blame. U.S. comp. sales grew by a tiny 0.3%, reflecting higher average checks, but lower guest counts overall despite strong promotional drivers and menu innovations like the Chicken Big Mac. Latin America saw higher growth, but it was offset by negative numbers from China, disruption in the Middle East, and weakness in France and the U.K. With some analysts expecting McDonald’s to gain market share as consumers dine out less and turn to lower-cost offerings, this is hardly good news. 

Tune into the Schwab Network for more earnings breakdowns!