Even better, it’s priced more attractively than some of its sexier, flashier e-commerce peers.
With a new CEO and coming off a solid earnings report, I think it’s time for investors to take another look at eBay stock, and appreciate it being one of the better e-commerce investments that you can make today.
EBAY Stock at a Glance
EBAY reported first-quarter earnings in late April. The numbers beat Wall Street estimates. Adjusted earnings per share were 77 cents, versus analysts’ expectations of 74 cents. Revenue was $2.37 billion, which topped the $2.32 billion that Wall Street expected in the quarter.
However, revenue did fall 2% in a year-over-year basis, and operating income of $485 million represented a 6% drop from the same quarter a year ago. Net income also fell by 1% to $586 million.
EBAY also issued guidance for 2020, projecting adjusted earnings per share of $3 to $3.10, and revenue of $9.56 billion to $9.76 billion. Consensus expectations from analysts are for adjusted EPS of $2.92 and revenue of $9.82 billion.
Interim CEO Scott Schenkel had a rosy outlook:
As we look at Q1, I am pleased that we delivered on all of our commitments for the quarter, with key metrics such as Buyers, GMV and Revenue performing at or better than our expectations. Over the past several months, we have remained focused and clear-eyed about the strategic direction of the company and have driven substantial changes to position the business for sustainable and profitable long-term growth.
Turnover at the Top
It’s been nearly a month since eBay’s new CEO, Jamie Iannone, took the reins at eBay. He previously was COO of Walmart (NYSE:WMT) eCommerce and also has been CEO of the e-commerce division at Sam’s Club.
He replaces Schenkel and CEO Devin Wenig, who left eBay after four years following a dispute with the board of directors. More recently, EBAY announced on May 21 that Chairman Tom Tierney and Audit Committee Chairman Fred Anderson will retire after the June 29 annual meeting.
The changes should help Iannone refocus on the company’s core mission, particularly now that it sold its ticketing business, StubHub, for $4 billion in February in a perfectly timed deal.
Iannone addressed eBay’s mission in a LinkedIn post:
Now, as much of the world navigates uncharted and increasingly turbulent waters, I am proud to see eBay’s steady purpose manifest itself in new and exciting ways as the company does everything we can to support its buyers and sellers as COVID-19 continues to affect communities and day-to-day life across the country and around the world.
Why eBay Is a Good Buy
While the novel coronavirus is a global nightmare, it has been a boon for e-commerce stocks. For weeks, people lived under stay-at-home orders. Many stores shut down entirely or only dealt via e-commerce. That meant companies like Amazon (NASDAQ:AMZN), Walmart, and Shopify (NYSE:SHOP) saw traffic surge.
But you may forget that before all those e-commerce sites existed, there was eBay. Founded 25 years ago with primarily a consumer-to-consumer format, eBay survived the tech bubble to carve out its own niche in the e-commerce space.
While it is the oldest e-commerce company, eBay can’t compete with its newer competitors in terms of year-to-date returns. EBAY stock is up a healthy 20% since Jan. 1, but that pales compared to Amazon (32%) and Shopify (107%).
Only Walmart has a lower return than eBay, at almost 5%, and that’s because a sizable portion of WMT earnings comes from brick-and-mortar stores that were impacted by the coronavirus pandemic.
But look closer. One reason why I like eBay so much is that compared to those other companies, EBAY stock is downright cheap.
Consider the price-to-earnings ratio, which measures the company’s share price to its EPS. AMZN has an incredibly inflated P/E of 117, while Shopify’s P/E doesn’t even compute because the company is still operating at a loss.
eBay’s P/E, by the way, is an affordable 7.21, and that’s despite the stock being priced near all-time highs.
True, P/E ratio isn’t the only way to value a stock. But EBAY has become a dependable growth stock in recent quarters, regularly exceeding analysts’ earnings expectations. And with more than $4 billion cash on hand, the company is prepared for any economic downturn that may affect the e-commerce space in 2020.
The Bottom Line on eBay Stock
EBAY isn’t the sexiest or flashiest name in the e-commerce space, but it’s a dependable growth stock that is much more affordable than its competition. EBAY is a strong buy in my Portfolio Grader, where it gets an “A” rating right now.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.