Since PayPal (NASDAQ: PYPL) split from its parent company eBay in July 2015, the payment processor’s business fundamentals have gone from strength to strength as recently highlighted in the company’s quarterly release last week.

Castleton Rose’s Chief Investment Analyst presented his view from the company’s Hong Kong based headquarters.

“We were very supportive of the split back in July 2015 as we believe PayPal will continue as the dominant force in a rapidly growing sector, whose ceiling remains high as emerging consumer markets begin to utilize the convenience of making online payments.”

“Evidence of this growth is consistently apparent with each financial release and this most recent report is of no exception. Revenue growth on foreign currency transactions, that is non-US dollar transactions, was up 19 percentage points over the duration of this last quarter.”

“Through 2016, PayPal’s free-cash flow results have smashed expectations, which were conservatively placed at US$740. The actual figures reported were in the region of US$1.1 billion, some 25% up on forecasts. It is quite fair to say that PayPal continues to grow at a decidedly faster pace than its peers and we here at Castleton Rose maintain our stance that there is plenty more to come.”

As a number of key metrics exceeding management’s expectations, forecasted performance reviews were raised as revenue, previously forecast to reach US$10.7, estimates for the year 2016 were increased to US$10.85.

“In spite of better than expected results and in light of the post release revenue review, which we think still falls under the conservative bracket, the stock price is generally viewed upon as overpriced, primarily due to the company’s trading value in relation to earnings. However, as PayPal continues to grow at the rate it does, and as the market as a while is substantially overpriced, investors should expect to pay a premium for a top performance whose core-service appears unaffected by negative economic influences.

As rumors circled a potential merger with MasterCard and Visa, investors will be looking to increase their holding as the end game for PayPal could be the result of an attractive merger with either of the world’s largest credit card processors.