How High Can eBay Fly?

Shares of eBay (Nasdaq: EBAY  ) hit a 52-week high recently. Let's look at how it got here and whether clear skies are ahead.

How it got here
The iconic online auctioneer started off the year with a somewhat mixed fourth-quarter earnings release. Some of the strength in the results was tied to its acquisition of GSI Commerce last March, while eBay also enjoyed a big one-time gain on its majority stake in Skype, as software giant Microsoft (Nasdaq: MSFT  ) decided to pick it up. Its PayPal division continued to drive its organic growth.

PayPal faces a slew of small start-up competitors, the most threatening of which is Square, a company that's been taking the mobile payment world by storm. PayPal's polygonal response to the threat was a triangle-shaped payment-processing dongle, which was launched in March.

Just a few weeks ago, the company posted a strong beat in first-quarter results, sending shares jumping by upwards of 17%. It's been trending higher ever since.

How it stacks up
Let's see how eBay stacks up against some of its peers.

EBAY Chart

EBAY data by YCharts.

We'll include some additional fundamental metrics for a deeper read.

Company

P/E (TTM)

EPS Growth (5-year rate)

Net Margin (TTM)

ROE (TTM)

eBay 16.2 14.3% 26.8% 19.2%
Amazon.com (Nasdaq: AMZN  ) 190.5 25.0% 0.9% 7.7%
MercadoLibre (Nasdaq: MELI  ) 55.6 161.0% 25.7% 39.3%

Source: Reuters. TTM = trailing 12 months.

All three of these companies are players in e-commerce and payment processing. MercadoLibre has long been casually referred to as the "eBay of Latin America" -- and for good reason. The two don't compete thanks to a strategic alliance from more than a decade ago, which resulted in eBay investing in MercadoLibre while agreeing not to compete in the region until 2006.

Amazon has been focusing more on media and content sales lately and its Web Services cloud business, while eBay's goods are typically of the tangible variety.

What's next?
Mobile payments are the next big thing for eBay, and its PayPal brand is a well-known player in the space that continues to gain momentum with its network effects. Our own CAPS community has given it a solid four-star rating, and it's long been an official Fool recommendation. eBay has plenty of room to run.

Interested in more info on eBay? Add it to your watchlist by clicking here.

Fool contributor Evan Niu owns shares of Amazon.com, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Amazon.com and Microsoft. Motley Fool newsletter services have recommended buying shares of eBay, Mercadolibre, Amazon.com, and Microsoft; creating a bull call spread position in Microsoft; and writing puts on eBay. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 04, 2012, at 11:47 AM, George513 wrote:

    As far as making/saving $ and eBay goes, forget the stock and use the website.

    If you see an item that you want listed in auction format, send the seller a message asking if they will accept $x to end the auction early and sell the item to you. If that doesn’t work, use a sniping service such as Bidball.com to bid for you. It’ll bid in the last few seconds, helping to save $ and avoid shill bidding.

    If there is a particular item that you want that is relatively rare on eBay or goes fast when one is listed, use ebuyersedge.com to set up a saved eBay search for it. You’d get an e-mail whenever a match is listed. You can use the price, category, exclude word, etc. filters to narrow down the results that you get in the e-mails. Excellent for “Buy It Now”s priced right.

    If the item that you’re looking for is difficult to spell, try a misspelling search site like Typojoe.com to find some deals with items that have main keywords misspelled in the title. Other interested buyers may never see them.

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Related Tickers

8/28/2014 4:00 PM
EBAY $55.43 Down -0.49 -0.88%
eBay CAPS Rating: ****
AMZN $340.02 Down -3.16 -0.92%
Amazon.com CAPS Rating: ***
MELI $114.68 Up +0.09 +0.08%
MercadoLibre CAPS Rating: ****
MSFT $44.88 Up +0.01 +0.02%
Microsoft CAPS Rating: ***

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