eBay Inc (EBAY), Amazon.com, Inc. (AMZN): Why Analysts Are Underestimating This Stock

If you consider that analysts are calling for EPS growth of about 15% today, imagine what might happen once PayPal becomes a larger part of the company’s growth. In the U.S. alone, eBay Inc (NASDAQ:EBAY) is killing Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT), and comes in a close second to Amazon.com, Inc. (NASDAQ:AMZN). Whereas Target and Wal-Mart grew revenue in the U.S. by 0.5% and 0.3%, respectively, Amazon posted 29.61% revenue growth. eBay’s U.S. revenue growth was 16%, but again, the company’s different business model means the company’s smaller revenue growth usually turns into greater earnings growth.

Considering that Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT) sell for 16 and 15 times projected earnings, respectively, you would think investors paying 19 times projected earnings for eBay Inc (NASDAQ:EBAY) would mean similar growth rates at each company. However, eBay’s growth in users, commerce, and revenue is far better than either of these retail titans. While Amazon.com, Inc. (NASDAQ:AMZN)’s growth story looks good, does the company deserve a valuation that is nearly 1,500% higher than eBay? I don’t believe Amazon is worth that much more than eBay, and for this reason and more, analysts seem to be underestimating eBay.

Chad Henage owns shares of Target. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay.

The article 3 Reasons Analysts Are Underestimating This Stock originally appeared on Fool.com.

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