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eBay At All-Time High: ETFs in Focus

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Shares of eBay Inc. (EBAY - Free Report) gained about 3.3% on Jul 6, hitting a new all-time high. The coronavirus outbreak worked wonder for this online retail giant. The pandemic and the resultant need for social distancing has boosted online shopping activities. In early June, market research company eMarketer expected ecommerce to reach 14.5% of total retail sales in 2020, marking both an all-time high and the biggest share increase in a single year. No wonder, eBay benefited greatly from the trend.

eBay Lifts Q2 Guidance

Last month, the company projected revenues for the second quarter within $2.75-$2.8 billion, up from the previous guided range of $2.38-$2.48 billion, indicating year-over-year growth of 13-16%. In addition, non-GAAP earnings are expected within $1.02-$1.06 per share, up from the previous expectation of 73-80 cents.

eBay provided no update on its revenue and earnings guidance for full-year 2020. However, the company expects its full-year performance to be above the ranges announced during the first-quarter earnings call. Earlier, the company had guided full-year revenues within $9.56-$9.76 billion, indicating FX-neutral growth of 1-3%, and adjusted earnings per share in the range of $3.00-$3.10.

A Sneak Peak at Q1

eBay delivered strong first-quarter 2020 results. The company’s non-GAAP earnings per share of 77 cents surpassed the Zacks Consensus Estimate by 4.1%. Also, the bottom line improved 19% year over year and 4.9% sequentially.

In addition, net revenues of $2.4 billion surpassed the Zacks Consensus Estimate of $2.3 billion. The top line was up 1% from the prior-year quarter on an FX-neutral basis but down 1.6% on a reported basis. During the quarter, the company witnessed solid momentum across managed payments offerings, which processed in excess of $3 billion of GMV for more than 32,000 sellers.

Upbeat Analyst Estimates for Q2

Over the past 30 days, the earnings estimate for the second quarter was raised to $1.05 per share from 80 cents per share. Full-year estimate was increased from $3.09 to $3.48 per share. As many as 12 analysts boosted their EPS estimates for Q2 over the past 30 days and 13 analysts raised the same for the full year.

The stock has been included to a list of high cash flow return on investment (CFROI) stocks at Credit Suisse on Jul 1 for the third quarter of 2020. Their view was that the stock has attractive valuations, low market expectation, a new chief executive officer, higher share repurchases and growth in the digital payments arena, per a 247wallst.com article.

Still a Dividend Payer

eBay paid dividend of $114 million, returning a total of $4.1 billion to its shareholders. The company raised its dividend by 14.29% in February 2020. Despite the pandemic, it has not stopped its dividend payments as yet. As of Jul 6, 2020, the dividend yield is 1.18%, way better than benchmark treasury bond yields of 0.69%.

ETFs in Focus  

The stock carries a Zacks Rank #1 (Strong Buy) at the time of writing. Shares of eBay have added about 55% since the beginning of the year compared with the S&P 500 Index's decline of about 1.6%, indicating more growth in the cards as the second wave of virus contagion hits.

So, some e-Bay heavy retail ETFs could be on your wish list. This is because the basket approach is safer than the single-stock picking route as it alleviates stock-specific weakness.

First Trust Nasdaq Retail ETF

The underlying Nasdaq US Smart Retail Index is a modified factor-weighted index, designed to provide exposure to U.S. companies within the retail industry. The fund invests about 8.9% in the stock and charges 60 bps.

Direxion All Cap Insider Sentiment Shares (KNOW - Free Report)

The underlying index is designed to identify securities that receive favorable analyst ratings and are being acquired by company insiders, such as top management, directors and large institutional holders. eBay has about 5% weight in the fund. It charges 66 bps in fees.

ProShares Online Retail ETF (ONLN - Free Report)

The underlying ProShares Online Retail Index is a specialized retail index that tracks retailers who principally sell online or through other non-store channels. eBay takes the 4th position in the fund with about 5% weight. ONLN charges 58 bps in fees.

Global X E-commerce ETF (EBIZ - Free Report) )

The 40-stock fund seeks to invest in companies positioned to benefit from the increased adoption of e-commerce as a distribution model including companies with principal business in operating e-commerce platforms and providing e-commerce software plus services. The fund puts 5.09% weight in e-Bay and charges 50 bps in fees.

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