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What's in Store for eBay Inc. (EBAY) This Earnings Season?

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eBay Inc. (EBAY - Free Report) is set to report second-quarter 2016 results on Jul 20. Last quarter, the company posted a positive earnings surprise of 5.13%.

Let us see how things are shaping up for this announcement.

Factors to Consider

eBay delivered decent first-quarter results, with both earnings and revenues beating the respective Zacks Consensus Estimates.

Management sounded upbeat about the upcoming quarter and mentioned several initiatives including the collection of data from sellers, application of artificial intelligence for a better user experience, increased use of social media to drive traffic and focus on a discovery-based user experience, to mention a few.

While the separation from PayPal (PYPL - Free Report) resulted in the loss of a good growth engine, eBay seeks to attract customers to its online properties, engage them and thus generate revenues.

For the second quarter of 2016, eBay expects revenues to grow 4%–6% on an FX neutral basis to $2.14 billion to $2.19 billion. Non-GAAP earnings are expected to be within 40–42 cents.

Earnings Whispers

EBAY INC Price and EPS Surprise

EBAY INC Price and EPS Surprise | EBAY INC Quote

Our proven model does not conclusively show that eBay will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 39 cents. Hence, the difference is 0.00%.

Zacks Rank: eBay carries a Zacks Rank #2, which increases the predictive power of ESP. But the company’s 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

QUALCOMM Inc. (QCOM - Free Report) , with an Earnings ESP of +3.61% and a Zacks Rank #2. The company is slated to report second-quarter 2016 earnings results on Jul 20, 2016.

Intel Corporation (INTC - Free Report) , with an Earnings ESP of +3.77% and a Zacks Rank #2. The company’s second-quarter 2016 earnings release date is Jul 20, 2016.

Amazon.com, Inc. (AMZN - Free Report) , with an Earnings ESP of +37.72% and a Zacks Rank #3. The company is set to report second-quarter 2016 earnings results on Jul 28, 2016.

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