eBay’s Top Line To Beat Consensus Estimates For FY 2019?

by Trefis Team
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eBay (NASDAQ:EBAY) is slated to release its Q4 and full-year 2019 results on January 28, 2020. We believe that eBay’s Revenues will beat consensus but earnings will be short of consensus estimate. We expect eBay to report revenues of $11.6 billion (vs. consensus estimate of $10.8 billion), which would be 8.2% higher than the previous year. Earnings are likely to be around $2.20 (vs. consensus estimate of $2.77), lower than the $2.55 reported in 2018, due to a lower net income margin. We believe that stronger-than-expected revenues for FY 2019 would be able to overshadow negative earnings growth and will likely result in a positive movement in eBay’s stock price once earnings are announced. In fact, our forecast indicates that eBay’s Valuation is $40 per share, which is higher than its current market price of roughly $36.

A] Revenue Expected To Beat Consensus

  • Total revenues has increased from $9 billion in 2016 to $10.7 billion in 2018.
  • Trefis estimates eBay’s revenues to improve further by 8.2% to $11.6 billion in 2019 from $10.7 billion in 2018.
  • Revenue improvement is expected to be driven primarily by the Marketplaces segment.

A separate interactive dashboard for eBay provides an in-depth view of eBay’s revenue trend and segment-wise revenue performance, along with forecast for 2019 and 2020.

B] EPS To Be Lower Than Expected

  • eBay’s 2019 earnings per share (EPS) is expected to be $2.20 per Trefis analysis, lower than the consensus estimate of $2.77 per share.
  • A high increase in Total expenses slightly offset by increase in revenue, along with lower share count, will drive the EPS decrease compared to 2018.
  • As we forecast eBay’s Revenues to improve and Expenses to increase further in 2019 (8.2% vs 15.3%), this will result in a fall in eBay’s Net Income Margin figure from 23.5% in 2018 to 18.5% in 2019.

C] Stock Price Estimate Higher than Market Price

  • A trailing P/E multiple of 18x looks appropriate for eBay’s stock, which is higher than the current implied P/E multiple of 13x.
  • As per Trefis, eBay’s 2019 revenue will be higher than the market expectations while earnings are expected to be lower than market expectations. This forecast works out to a fair value of $40 for eBay’s stock, which is higher than its current market price of around $36.

Additionally, you can input your estimates for eBay’s key metrics in our interactive dashboard for eBay’s pre-earnings, and see how that will affect the company’s stock price.

 

 

See all Trefis Price Estimates and Download Trefis Data here

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