eBay Inc (EBAY): The Industry to Watch Out For

Page 1 of 2

There is no doubt that with every passing day, more and more operations of the retail and banking business are shifting online. The company that I believe can extract the most benefit from this shift is eBay Inc (NASDAQ:EBAY). The company’s strong performance is well replicated in its stock price increase by over 35% in the last year. Let’s see what we can expect with eBay’s second quarter earnings report.

Revenue estimate

According to the analysts at Yahoo! Finance, eBay Inc (NASDAQ:EBAY) is expected to post revenue of $3.89 billion, which, if achieved, would be a 14.5% growth from a year ago figure of $3.40 billion. The company itself estimated its revenue in its first quarter earnings call to be $3.80 billion to $3.90 billion. So, meeting the analysts’ estimates should be well within the comfort zone of the company.

Earnings estimate

In the last four quarters, the company has been consistently beating the consensus estimates by a cent and giving investors small positive surprises for over a year now. For the current quarter, the consensus estimates an earning figure of $0.64, which would be a 14% hike in EPS compared to the same quarter last year.

The analysts estimate higher earnings than the company’s management expectation of $0.61 to $0.63 as reported in their last earnings call. In the first quarter, eBay Inc (NASDAQ:EBAY)’s GAAP operating margin increased to 21.3% from 19.9% from the same period last year. As the margin is improving, achieving the targeted earnings won’t be much trouble for the company.

Strong business

eBay Earnings ReporteBay Inc (NASDAQ:EBAY) is a platform that connects buyers and sellers, hence it does not need to maintain huge inventory and thus saves huge warehousing costs along with other infrastructure and staffing expenditures. The company charges a commission for using its platform which accounts for its revenue. The company’s business has two main segments: the Marketplaces segment and the Payment segment.

The Marketplaces segment had a strong first quarter this year with net revenue surging 13% to $2 billion – driven because of improved customer experience, increased mobile commitment, and robust performance in the clothing, accessories, and home and garden categories.

The margins from the Marketplaces segment improved 340 basis points to 42.1% in the quarter, mainly due to efficient marketing expend. The company has increased investments in the second quarter, but still expects 38% to 42% margin from the segment, which would only improve when the capex finally starts delivering.

The e-payment king

PayPal has grown profoundly and is well ahead other players who provide similar payment platforms. Last year, PayPal’s active account growth increased to 15%, and in all had 123 million digital wallets. PayPal mobile handled $14 billion in payment volume in 2012, and is expected to handle $20 billion in mobile payments volumes this year, making it clearly evident that the company is all set to be the future of mobile payment. Further, as per Morningstar, over 60 out of 100 online retailers in the U.S. accept PayPal, and, with time, more merchants and retail stores should join PayPal, making it stronger.

Future growth

eBay Inc (NASDAQ:EBAY) has penetrated the U.S. market and has its presence in more than 40 countries. E-commerce is not that recognized of a concept in other countries, which should eventually change radically in the subsequent five years with the growth of middle-class population in the emerging countries.

The company understands the importance of global market and has thus acquired 2dehands.be and 2ememain.be, two of the biggest online sites in Belgium. It has also entered in a deal to buy SnapDeal.com, India’s newest online marketplace, substantiating eBay Inc (NASDAQ:EBAY)’s intentions, which is to become a leader in e-commerce in emerging markets.

Competition

Amazon.com, Inc. (NASDAQ:AMZN), is the true competitor of eBay Inc (NASDAQ:EBAY) because it is also used by top retail stores in the U.S. for their online transactions. Over the years of exquisite performance, Amazon has gained the trust of the top players in the industry.

Amazon.com, Inc. (NASDAQ:AMZN), too, acknowledges the importance of international expansion and is entering new markets, Amazon Prime and Amazon Web Services being the perfect example of its diversification projects.

Amazon.com, Inc. (NASDAQ:AMZN), over time, has taken away many of the traditional business from the brick and mortar retailers. In the span of last ten years, the company has diversified into different segments such as music, games, e-readers, etc. to broaden its horizon.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!