A month has gone by since the last earnings report for eBay (EBAY - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is eBay due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
eBay Surpasses Earnings and Revenue Estimates in Q1
eBay Inc. reported first-quarter 2019 pro-forma earnings of 67 cents, surpassing the Zacks Consensus Estimate by 4 cents. The reported figure also improved 26.4% year over year.
Gross revenues of $2.6 billion increased 6% year over year (up 4% on an Fx-neutral basis) and surpassed the Zacks Consensus Estimate of $2.58 billion.
The company continues to leverage structured data and Artificial Intelligence (AI) to improve user experience on its platform. Notably, this aided in the growth of active buyers on its platform, in turn driving GMV. Robust growth of Advertising and Payment platform drove eBay’s top-line growth.
Revenues and GMV
In the first quarter, the Marketplace platform accounted for$2.2 billion of revenues, up 3% year over year on a reported basis and 4% on an FX-Neutral basis. Marketplace GMV was $21.6 billion, down 4% year over year on a reported basis and 1% on a FX-Neutral basis. The increase was aided by continual expansion of new user experiences.
StubHub contributed $1 billion of GMV, down 3% on a year-over-year basis, and revenues of $230 million, flat from the year-ago quarter.
Classifieds platforms performed pretty well during the quarter, contributing $256 million to revenues, up 4% year over year and 12% on a FX-Neutral basis.
Total GMV of $22.6million in the first quarter was down 4% year over year on a reported basis and 1% on an Fx-neutral basis.
During the quarter, global active buyers/customers increased 4% from the year-ago period to 180 million.
Margins and Income
Pro-forma gross margin in the quarter was 77.3%, down 100 basis points (bps) year over year.
Adjusted operating expenses of $1.35 billion decreased 0.9% from the prior-year quarter. As a percentage of sales, sales and marketing and product development expenses decreased, while general & administrative costs increased.
Non-GAAP operating margin was 29.8% in the first quarter, up 190 bps year over year.
Balance Sheet and Cash Flow
eBay’s balance sheet is highly leveraged, with a long-term debt of $7.7 billion. Cash and short-term investments balance was $4.4billion at the end of the first quarter versus $4.9 billion in fourth-quarter 2018.
eBay generated $550 million in cash from operating activities and spent $182 million on capex. Free cash flow during the quarter was $368 million and the company repurchased shares worth $1.5 billion.
In addition, it paid $125 million in cash dividends during the first quarter.
Outlook
For the second quarter of 2019, eBay expects revenues to grow 2-4% on an Fx-neutral basis to $2.64-$2.69 billion. Non-GAAP earnings are expected within 61-63 cents. GAAP earnings per share from continuing operations are expected in the range of 41-45 cents.
eBay increased its full-year revenue guidance for 2019. The company now expects full-year revenues between $10.83 billion and $10.93 billion, representing Fx-neutral growth of 2- 3%.
Adjusted earnings per share are expected within $2.64-$2.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, eBay has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, eBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
A month has gone by since the last earnings report for eBay (EBAY - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is eBay due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
eBay Surpasses Earnings and Revenue Estimates in Q1
eBay Inc. reported first-quarter 2019 pro-forma earnings of 67 cents, surpassing the Zacks Consensus Estimate by 4 cents. The reported figure also improved 26.4% year over year.
Gross revenues of $2.6 billion increased 6% year over year (up 4% on an Fx-neutral basis) and surpassed the Zacks Consensus Estimate of $2.58 billion.
The company continues to leverage structured data and Artificial Intelligence (AI) to improve user experience on its platform. Notably, this aided in the growth of active buyers on its platform, in turn driving GMV. Robust growth of Advertising and Payment platform drove eBay’s top-line growth.
Revenues and GMV
In the first quarter, the Marketplace platform accounted for$2.2 billion of revenues, up 3% year over year on a reported basis and 4% on an FX-Neutral basis. Marketplace GMV was $21.6 billion, down 4% year over year on a reported basis and 1% on a FX-Neutral basis. The increase was aided by continual expansion of new user experiences.
StubHub contributed $1 billion of GMV, down 3% on a year-over-year basis, and revenues of $230 million, flat from the year-ago quarter.
Classifieds platforms performed pretty well during the quarter, contributing $256 million to revenues, up 4% year over year and 12% on a FX-Neutral basis.
Total GMV of $22.6million in the first quarter was down 4% year over year on a reported basis and 1% on an Fx-neutral basis.
During the quarter, global active buyers/customers increased 4% from the year-ago period to 180 million.
Margins and Income
Pro-forma gross margin in the quarter was 77.3%, down 100 basis points (bps) year over year.
Adjusted operating expenses of $1.35 billion decreased 0.9% from the prior-year quarter. As a percentage of sales, sales and marketing and product development expenses decreased, while general & administrative costs increased.
Non-GAAP operating margin was 29.8% in the first quarter, up 190 bps year over year.
Balance Sheet and Cash Flow
eBay’s balance sheet is highly leveraged, with a long-term debt of $7.7 billion. Cash and short-term investments balance was $4.4billion at the end of the first quarter versus $4.9 billion in fourth-quarter 2018.
eBay generated $550 million in cash from operating activities and spent $182 million on capex. Free cash flow during the quarter was $368 million and the company repurchased shares worth $1.5 billion.
In addition, it paid $125 million in cash dividends during the first quarter.
Outlook
For the second quarter of 2019, eBay expects revenues to grow 2-4% on an Fx-neutral basis to $2.64-$2.69 billion. Non-GAAP earnings are expected within 61-63 cents. GAAP earnings per share from continuing operations are expected in the range of 41-45 cents.
eBay increased its full-year revenue guidance for 2019. The company now expects full-year revenues between $10.83 billion and $10.93 billion, representing Fx-neutral growth of 2- 3%.
Adjusted earnings per share are expected within $2.64-$2.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, eBay has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, eBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on EBAY - FREE