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eBay (EBAY) Gears Up for Q1 Earnings: What's in the Cards?

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eBay (EBAY - Free Report) is set to report first-quarter 2020 results on Apr 28. In the last reported quarter, it delivered a positive earnings surprise of 8%.

The company beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, delivering an average surprise of 6.8%.

For the first quarter, the Zacks Consensus Estimate for earnings has been stable at 74 cents per share over the past 30 days. This indicates growth of 10.5% from the year-ago reported figure.

Notably, the consensus mark for revenues is pegged at $2.34 billion, implying a decline of 11.7% from the year-ago reported figure.

Let’s see how things have shaped up for this announcement.

eBay Inc. Price and EPS Surprise

 

Marketplace Active Buyers to Drive Growth

eBay’s sales are expected to have marginally improved on a year-over-year basis from growth in online consumer spending due to broad-based and increasing social distancing.

eBay’s accelerated Artificial Intelligence efforts through personalization, image search technology and customer support are expected to have enhanced the Marketplace platform.

The company has been providing more data to its marketplace sellers, including price and restocking guidance, as well as more insight into inventory such as demand signals for the right products, price, and timing.

Notably, eBay has been offering a local feature that allows customers to buy something online and then pick it up at a local store when convenient. This is likely to have reduced shipping costs and boosted the Marketplace business.

Advertising & Payment Platform to Benefit eBay

eBay progressed well with the payment and advertising business in the first quarter, backed by robust growth in Promoting Listings.

The company expanded its management of payments to the United States, Germany and the U.K., which should have aided top-line growth in the to-be-reported quarter.

Core Platform Strength to Drive Net Transaction Revenues

In a bid to increase total net transaction revenues, eBay has been strengthening its core platform and improving user experience.

The company has been accelerating efforts to build product catalogs on structured data, enhance mobile platform, roll out browse-inspired shopping journeys, rejuvenate customer-to-customer business and strengthen its brand. This is likely to have contributed to top-line growth in the first quarter.

Overhangs

Heightening competition in the e-commerce market from companies like Amazon and multichannel retailers might have affected the company’s performance in the quarter.

eBay's increased investment in overall platform technology and slower growth rate than peers might have hampered earnings.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for eBay this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, eBay has a Zacks Rank #3.

Stocks That Warrant a Look

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post a positive earnings surprise in the quarter to be reported.

Pixelworks, Inc. (PXLW - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baidu, Inc. (BIDU - Free Report) has an Earnings ESP of +10.09% and a Zacks Rank of 2.

Etsy, Inc. (ETSY - Free Report) has an Earnings ESP of +8.17% and a Zacks Rank #2.

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