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eBay's (EBAY) Q1 Earnings to Gain from Marketplace Growth

Zacks Equity Research
Updated

eBay Inc. EBAY is scheduled to report first-quarter 2018 results on Apr 25.

The company beat the Zacks Consensus Estimate in only one of the trailing four quarters, with an average positive surprise of 0.52%. In fourth-quarter 2017, earnings of 59 cents per share were in line with the Zacks Consensus Estimate.

Gross revenues of $2.6 billion were up 9% on a year-over-year basis (up 7% on an Fx-neutral basis) and within the guided range of $2.58-$2.62 billion.

The growth was primarily driven by robust performance from the Marketplace platform, which we expect to continue in the to-be-reported quarter.
 

eBay Inc. Price and EPS Surprise

 

eBay Inc. Price and EPS Surprise | eBay Inc. Quote

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Marketplace Re-Platforming to Drive Growth

ebay is making every effort to improve its Marketplace business. The company is currently re-platforming itself by building product catalogs on structured data, enhancing mobile platform, rolling out new browse-inspired shopping journeys and strengthening its brand.

Moreover, eBay’s accelerated Artificial Intelligence (AI) efforts through personalization, image search technology, and customer support is expected to strengthen the Marketplace platform.

Of late, eBay has been giving more data to its marketplace sellers including price guidance, restocking guidance and more insight into inventory such as demand signals for the right products, price and timing.

Additionally, eBay continues to increase user engagement and satisfaction by driving traffic to its top-rated sellers. As a result, same-store sales at these retailers continue to grow at a healthy rate. The company expanded the use of social channels, which is significantly increasing traffic growth.

The partnership with Facebook FB is noticeable in this regard. The company is offering daily deals on Facebook’s Mobile Marketplace and also getting access to the latter’s huge user base.

Stock Up on Positive Growth Trends

eBay shares have returned 11.5% compared with the industry’s year-to-date rally of 7.7%. The improvement can be attributed to its re-platforming and brand enhancement initiatives backed by technological improvements. These factors are also anticipated to boost top-line growth in the first quarter.

 



eBay expects revenues to grow 7-9% on fx-neutral basis to $2.57-$2.61 billion. The Zacks Consensus Estimate is currently pegged at $2.60 billion, reflecting year-over-year growth 17.12%.

Moreover, non-GAAP earnings are expected between 52 and 54 cents per share. The Zacks Consensus Estimate is currently pegged at 53 cents, reflecting year-over-year growth 8.2%.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

eBay has a Zacks Rank #3 and an Earnings ESP of 0.31%, which indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are few stocks you may consider as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Western Digital WDC has an Earnings ESP of +2.20% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Paycom Software PAYC has an Earnings ESP of +0.33% and a Zacks Rank #1.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

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Western Digital Corporation (WDC) : Free Stock Analysis Report
 
eBay Inc. (EBAY) : Free Stock Analysis Report
 
Facebook, Inc. (FB) : Free Stock Analysis Report
 
Paycom Software, Inc. (PAYC) : Free Stock Analysis Report
 
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