I bay, you bay, we all bay for eBay
What analysts say:
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Buy, sell, or waffle? Thirty Wall Street analysts follow eBay's every move, and 16 of them want to buy the stock. Eleven are holding, and three might have some for sale. May I suggest where to unload them? Ahem.
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Revenues. $1.78 billion would satisfy the average analyst, and represent a 26% gain over the year-ago figure of $1.41 billion. That seems to be in line with official guidance, which points to a $1.75 billion to $1.80 billion range.
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Earnings. Management expects to hit non-GAAP earnings of $0.31 to $0.33 per share, and the analyst consensus numbers fall exactly in the middle of that range. That would be a serious upgrade from the adjusted $0.24 per share delivered a year ago.
What management says:
CFO Bob Swan thought the first quarter was a "strong start" to the new fiscal year. "We delivered solid revenue growth, expanded operating margins and strong earnings and free cash flow, while deploying capital to strengthen our business with our acquisition of StubHub and our continued share repurchase program," he said. Indeed, the company has bought back a healthy 3.7% of its own shares over the past year.
What management does:
eBay is keeping its margins stable by expanding its operations at a speed commensurate with revenue growth -- more on the growth plans below. While the bottom-line figure looks weak in this light, you might do well to look at the dollar amounts underneath, where the e-tailer has managed sequential growth for four quarters in a row.
|
12/05 |
3/06 |
6/06 |
9/06 |
12/06 |
3/07 |
|
|---|---|---|---|---|---|---|
|
Gross |
82.1% |
81.6% |
81% |
80.2% |
79.5% |
79% |
|
Operating |
32.4% |
31.4% |
30% |
29% |
29.3% |
29.7% |
|
Net |
23.8% |
21.9% |
19.7% |
19% |
18.9% |
19.8% |
|
FCF/Revenue |
36.7% |
34.7% |
31.8% |
29.2% |
29% |
27.7% |
|
Y-O-Y Growth |
12/05 |
3/06 |
6/06 |
9/06 |
12/06 |
3/07 |
|---|---|---|---|---|---|---|
|
Revenue |
39.2% |
38.5% |
35.6% |
34.1% |
31.1% |
29.2% |
|
Earnings |
39% |
28.7% |
10.4% |
5% |
4% |
16.8% |
One Fool says:
The guidance figures above assume an average exchange rate of $1.30 per euro over the quarter, but the dollar has been significantly weaker than that. The rate never did touch the $1.30 mark, and averaged out to $1.35. How significant is this 4% departure from expectations? The previous quarter saw much the same effect, to about the same magnitude, and eBay reported a $27.5 million cash gain from exchange-rate fluctuations as a result. This helped boost total cash and equivalents of $304.2 million and is 7% of net earnings -- which happened to beat Wall Street estimates by 10%. Hmm.
So a weaker dollar plays into eBay's multinational hands, and the company is looking to play that card some more with recent expansions in Turkey and Thailand. What once was a simplistic auction house is now becoming a pleochroic bird with a feather in everything from electronic payments to online communications, in addition to the geographic spread.
Watching eBay never gets boring, especially not when you can expect another positive report based on exchange rates alone. And CEO Meg Whitman -- once considered a frontrunner for the top spot at Disney, where she used to work -- surely has more ideas on how to grow this business than she'd let on publicly. You can't buy stock on auction, right? Just gimme a minute ...
Bid on more Foolish content:
eBay and Disney share more than a chunk of corporate history -- they're both Motley Fool Stock Advisor recommendations.
Fool contributor Anders Bylund is a Disney shareholder, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will help you find the road ahead.
