eBay Earnings Preview

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eBay (NAS: EBAY) beat estimates by $0.01 last quarter and investors are hoping it can beat them again. The company will unveil its latest earnings on Wednesday. eBay is an Internet company that, together with its subsidiaries, provides online marketplaces for the sale of goods and services. It also provides other online commerce platforms, online payment solutions, and communication offerings to a diverse community of individuals and businesses.

What analysts say:
 

  • Buy, sell, or hold?: The majority of analysts back eBay as a buy. But with 55.6% of analysts rating it a buy, eBay is still below the mean analyst rating of its nearest 10 competitors, which average 82.3% buys. Analysts don't like eBay as much as competitor HSN overall. Three out of four analysts rate HSN a buy compared to 15 of 27 for eBay. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
  • Revenue forecasts: On average, analysts predict $2.91 billion in revenue this quarter. That would represent a rise of 29.3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.40 per share. Estimates range from $0.38 to $0.43.

What our community says:
CAPS All-Stars are solidly backing the stock with 92.9% granting it an outperform rating. The community at large concurs with the All-Stars with 85.9% assigning it a rating of outperform. Fools are keen on eBay and haven't been shy with their opinions lately, logging 1,727 posts in the past 30 days. Despite the majority sentiment in favor of eBay, the stock has a middling CAPS rating of three out of five stars.

Management:
eBay's income has fallen year over year by an average of 11.7% over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

72.0%

71.4%

71.8%

71.5%

Operating Margin

18.8%

22.2%

23.7%

21.8%

Net Margin

10.3%

18.7%

22.4%

19.2%

One final thing: If you want to keep tabs on eBay movements, and for more analysis on the company, make sure you add it to your watchlist.

Motley Fool newsletter services have recommended buying shares of eBay.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

At the time this article was published

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