eBay, Inc. (EBAY) has been strong with the market for the last few months, recently hitting a new multi-year high at $31.64 on better-than-expected Q3 results. With an average earnings surprise of 8% over the last four quarters and bullish growth projection, this Zacks #1 rank stock is selling momentum to all bidders.
Company Description
eBay, Inc. and its subsidiaries provide online marketplaces and payment services worldwide. The company was founded in 1995 and has a market cap of $40 billion.
eBay suffered through the great recession of 2009 just like many other companies, with its share price briefly dropping below $10. But with the global economy on the rebound and e-commerce markets growing quickly, eBay’s business is on the upswing, on display in mid October with solid Q3 results that came in ahead of expectations.
Third-Quarter Results
Revenue for the period was up 10% from last year when excluding the Skype acquisition to $2.2 billion. earnings also came in strong at 35 cents, 13% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 8% over the last four quarters.
The company’s PayPal acquisition continues to bear fruit, with Merchant Services net total volume growing 40% for the fourth consecutive quarter.
eBay is also focused on managing costs and expenses, with its operating margin expanding to 21.8% from 19.8% last year.
Awesome Balance Sheet
eBay also has the financial flexibility of a pristine balance sheet, with cash and equivalents of $4.18 billion and no debt.
Estimates
We saw some pretty decent movement in estimates off the good quarter, with the current year gaining 6 cents to $1.45 and the next-year estimate adding 8 cents to $1.62, a solid 12% growth projection.
The valuation picture also looks good, with eBays’s forward P/E of 21X a sharp discount to its peer average of 41.5X.
6-Month Chart
On the chart, eBay has been strong for the last few months, recently hitting a new multi-year high at $31.64 on the good quarter. Look for support from the long-term trend line on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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