Best Buy Co., Inc. (BBY), Amazon.com, Inc. (AMZN), eBay Inc (EBAY): Can This Unsung Fundamental Hero Create More Gains For This 200% Performer?

What About E-Commerce Competitors?

While Best Buy Co., Inc. (NYSE:BBY)’s revenue of $9.3 billion was $170 million better than expectations, I think it is interesting that both Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) missed revenue expectations during their most recent quarters.

This brings me to another point–whether or not such e-commerce leaders are now a “sell’ with online sales taxes?

Like any industry, I think it depends on the company. In regards to eBay Inc (NASDAQ:EBAY), I think it is definitely a sell, as revenue growth was just 14% during its last quarter. However, that growth was mostly driven by PayPal, as its Marketplace revenue grew just 10% year-over-year.

Moreover, eBay Inc (NASDAQ:EBAY)’s valuation is supported by its operating margin of 20.75%, but with increased costs, margins are beginning to decline. Lastly, the company’s growth driver, PayPal, could face significant competition for the first time, as companies Facebook, Google, and Apple are reportedly working on similar payment services. Thus, I say eBay Inc (NASDAQ:EBAY) is a sell.

Amazon.com, Inc. (NASDAQ:AMZN) is a different kind of company, as there are essentially zero margin expectations, and the company is valued solely on top-line growth. With e-commerce just 5% of retail sales, there is still a large market for Amazon.com, Inc. (NASDAQ:AMZN) to penetrate.

Not to mention the fact that the company’s now entering the $560 billion a year grocery business, which could be a new driver of significant growth. Hence, at just 1.95 times sales, compared to eBay Inc (NASDAQ:EBAY) at 4.5 times sales, I think Amazon.com, Inc. (NASDAQ:AMZN) still presents a good long-term opportunity.

Final Thoughts

The competitive landscape has changed for Best Buy Co., Inc. (NYSE:BBY), and with new leadership, the company has responded nicely. So long as margins rise I think Best Buy’s stock will trade higher. However, online sales will be crucial to the Best Buy equation, as these sales often produce higher profits, and with legislation we could see continued growth in the company’s online sales. This unsung fundamental hero may be small in terms of impact, but with its growth, there’s no doubt that online sales will become important to Best Buy’s future and immediate stock performance.

The article Can This Unsung Fundamental Hero Create More Gains For This 200% Performer? originally appeared on Fool.com and is written by Brian Nichols.

Brian Nichols owns Best Buy. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay.

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