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eBay (EBAY) Touches a New 52-Week High on Expansion Deals

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Shares of eBay Inc. (EBAY - Free Report) hit a new 52-week high of $37.79 on Sep 8, closing a tad lower at $37.73. The stock has gained 16.3% in a year’s time.

However, the company’s shares have gained only 27.3% year to date, underperforming the industry’s 46.7% rally.

Currently, eBay holds a Zacks Rank #3 (Hold). Moreover, it has a market cap of approximately $40.5 billion. Average volume of shares traded in the last three months was roughly 8,745K.

Notably, the company’s shares have returned 1.6% in the last two months following its second-quarter fiscal 2017 results.

What is Driving eBay?

eBay is one of the largest online retailers in the world. The company’s focus on improving buyers’ experience, opportunities in the fast-growing mobile space, international expansion and a strong balance sheet are likely to boost long-term growth.

Notably, eBay is making a lot of efforts to expand its international footprint. Only recently, eBay expanded its partnership with MallforAfrica to further strengthen its cross border business. Created in 2011, MallforAfrica is a platform to help connect businesses with consumers in Africa.

The deal will help eBay to increase its presence in Africa and open new revenue opportunities.  According to consulting firm McKinsey, digital sales revenue in Africa will top $75 billion by 2025. Given such impressive projected numbers in Africa, eBay is sure to gain from it.

Also, eBay has been making continuous efforts to fuel growth in its Marketplaces business. It has re-platformed itself by building product catalogs on structured data, enhancing mobile platform, rolling out new browse inspired shopping journeys and strengthening its brand.

Last month, eBay Inc. entered into a partnership with Facebook to offer daily deals on Facebook’s Mobile Marketplace. The deal will boost eBay’s Marketplace by offering its platform features to Facebook and getting access to the latter’s huge user base in return.

Also, eBay struck a deal with Shopify in July. The two launched a new sales channel, an integrated platform that allows Shopify sellers to synchronize inventory information, sell products ordered on eBay and view eBay buyer messages directly from Shopify accounts.

These moves will help accelerate eBay's growth. In the second quarter, eBay added nearly two million active buyers to its platforms, for a total of 171 million.

Now coming to eBay’s second-quarter results, the company’s earnings of 34 cents per share missed the Zacks Consensus Estimate by 4 cents. Increase in cost of revenues and operating expenses (predominantly sales and marketing) weighed on eBay’s bottom line.

However, the company’s revenues of $2.33 billion surpassed the Zacks Consensus Estimate by a slight margin and came ahead of the guided range. Revenue growth was driven by strength in international markets, increase in active buyers, expansion of new user experience and brand advertising.

Furthermore, it delivered an average positive earnings surprise of nearly 1.09% in the trailing four quarters.

Notably, this e-Commerce service provider company’s solid market position, several initiatives like building a solid foundation of structured data and artificial intelligence (AI), customer-to-customer (C2C) business  and enhancing mobile experience, strong revenue growth, continued innovation and strong long-term growth potential position it favorably. It expects to report third quarter results on Oct 18.

eBay Inc. Price and Consensus

 

eBay Inc. Price and Consensus | eBay Inc. Quote

Key Picks

A few better-ranked stocks in the same space include Lam Research Corporation (LRCX - Free Report) , Applied Materials (AMAT - Free Report) and Stamps.com Inc. , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lam Research delivered a positive earnings surprise of 4.44%, on average, in the trailing four quarters.

Applied Materials delivered a positive earnings surprise of 2.66%, on average, in the trailing four quarters.

Stamps.com Inc. delivered a positive earnings surprise of 30.64%, on average, in the last four quarters.

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