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In the fast-paced world of tech, yesterday's giants can sometimes fade from the spotlight. But what if a forgotten player still holds hidden potential? eBay(EBAY - Free Report) , once a pioneer in online commerce, might be exactly that. This article dives into why this familiar name could be an exciting opportunity for investors seeking value in the tech sector.
Company History
eBay's journey began in 1995 as AuctionWeb, a hobby project connecting buyers and sellers. The first sale on the site was a broken laser pointer! From there, it ballooned quickly, with its official name change to eBay in 1997 and an IPO a year later.
A key move came in 2002 with the acquisition of PayPal(PYPL - Free Report) , solidifying their online transaction power. However, eBay spun off PayPal in 2015, focusing on core marketplace operations and building a strong seller base. While not the giant it once was, eBay remains a major force in e-commerce today.
Although eBay stock has not recorded exceptional returns in the last 15 years, they are still respectable, even if below market performance. Over that time the stock has compounded at an annual rate of 9.8%, and now pays a tidy 2.1% dividend to shareholders.
However, there are several bullish catalysts that I think could send the stock higher in the near term.
Image Source: Zacks Investment Research
Earnings Estimates
eBay currently boasts a Zacks Rank #2 (Buy) rating, reflecting steadily upward trending earnings revisions. FY24 earnings estimates have been raised by 3.6% and are expected to grow 8% YoY, while FY25 have risen by 4.5% and are projected to climb 7% YoY.
Image Source: Zacks Investment Research
Consistent Share Buybacks
Shares outstanding in eBay have steadily declined, more than halving in the last ten years. With management buying back shares at such a pace, you can call eBay a share cannibal. This activity is fantastic news as it shows a further commitment to returning cash to shareholders and keeps a steady bid under the stock.
Image Source: Zacks Investment Research
Technical Setup
When looking at the technical chart for eBay, we can see the price just initiated a stage one breakout, a signal that can precede extended bull runs. eBay stock has been consolidating near its recent lows for two years and has now made a convincing move higher.
Furthermore, we have a smaller bull flag from which to measure a continuation trade. If EBAY can clear the $52 level, we can confirm a multi-timeframe breakout. Unless the stock breaks back down below the $50 level, I remain bullish.
Image Source: TradingView
Bottom Line
Although eBay’s business isn’t growing at a fast pace, the mix of share buybacks, rising earnings estimates, and a technical setup make for a worthy consideration. Additionally, it should be noted that eBay enjoys a reasonable valuation of 11.2x forward earnings, well below its 15-year median of 18.3x.
Thus, for investors seeking an under-the-radar stock idea, EBAY may make for a strong addition to your investment portfolio.
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Forgotten Tech Stock Offers Compelling Opportunity
In the fast-paced world of tech, yesterday's giants can sometimes fade from the spotlight. But what if a forgotten player still holds hidden potential? eBay (EBAY - Free Report) , once a pioneer in online commerce, might be exactly that. This article dives into why this familiar name could be an exciting opportunity for investors seeking value in the tech sector.
Company History
eBay's journey began in 1995 as AuctionWeb, a hobby project connecting buyers and sellers. The first sale on the site was a broken laser pointer! From there, it ballooned quickly, with its official name change to eBay in 1997 and an IPO a year later.
A key move came in 2002 with the acquisition of PayPal (PYPL - Free Report) , solidifying their online transaction power. However, eBay spun off PayPal in 2015, focusing on core marketplace operations and building a strong seller base. While not the giant it once was, eBay remains a major force in e-commerce today.
Although eBay stock has not recorded exceptional returns in the last 15 years, they are still respectable, even if below market performance. Over that time the stock has compounded at an annual rate of 9.8%, and now pays a tidy 2.1% dividend to shareholders.
However, there are several bullish catalysts that I think could send the stock higher in the near term.
Image Source: Zacks Investment Research
Earnings Estimates
eBay currently boasts a Zacks Rank #2 (Buy) rating, reflecting steadily upward trending earnings revisions. FY24 earnings estimates have been raised by 3.6% and are expected to grow 8% YoY, while FY25 have risen by 4.5% and are projected to climb 7% YoY.
Image Source: Zacks Investment Research
Consistent Share Buybacks
Shares outstanding in eBay have steadily declined, more than halving in the last ten years. With management buying back shares at such a pace, you can call eBay a share cannibal. This activity is fantastic news as it shows a further commitment to returning cash to shareholders and keeps a steady bid under the stock.
Image Source: Zacks Investment Research
Technical Setup
When looking at the technical chart for eBay, we can see the price just initiated a stage one breakout, a signal that can precede extended bull runs. eBay stock has been consolidating near its recent lows for two years and has now made a convincing move higher.
Furthermore, we have a smaller bull flag from which to measure a continuation trade. If EBAY can clear the $52 level, we can confirm a multi-timeframe breakout. Unless the stock breaks back down below the $50 level, I remain bullish.
Image Source: TradingView
Bottom Line
Although eBay’s business isn’t growing at a fast pace, the mix of share buybacks, rising earnings estimates, and a technical setup make for a worthy consideration. Additionally, it should be noted that eBay enjoys a reasonable valuation of 11.2x forward earnings, well below its 15-year median of 18.3x.
Thus, for investors seeking an under-the-radar stock idea, EBAY may make for a strong addition to your investment portfolio.