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 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways 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

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

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!