Shares of eBay (EBAY 1.32%) surged 15.1% in February, according to data provided by S&P Global Market Intelligence. The primary catalyst was the e-commerce company's solid fourth-quarter results. Those numbers are giving it the confidence to return more cash to shareholders.

eBay's plan is starting to deliver results

eBay ended 2023 on a solid note. The e-commerce company reported $2.6 billion in revenue during the fourth quarter, up 2% from the year-ago period. Meanwhile, its adjusted net income was flat at $1.07 per share. Those numbers exceeded analysts' expectations of $2.5 billion in revenue and $1.03 per share of adjusted earnings. The company also reported better-than-expected gross merchandise volume at $18.6 billion, a 2% increase. "Last year, we made significant progress toward our vision to reinvent the future of e-commerce for enthusiasts," stated CEO Jamie Iannone in the fourth-quarter earnings press release.

The company expects to deliver more forward progress in 2024. It sees its first-quarter revenue rising by as much as 2%, which would exceed analysts' expectations at the high end. Earnings should also improve this year as it benefits from cost reduction efforts, including reducing staff by 9%.

eBay continues to generate strong free cash flow. Last year, it produced $2.4 billion in operating cash flow and $2 billion in free cash flow. It returned nearly all that money to shareholders. It paid $528 million in dividends and repurchased $1.4 billion in shares.

The company expects to continue returning cash to investors. eBay increased its dividend by 8% last month. It also authorized an additional $2 billion in share repurchases, increasing its remaining authorization to $3.4 billion. eBay has a strong, cash-rich balance sheet ($5.1 billion in cash and non-equity investments), giving it lots of financial flexibility to continue returning money to investors.

Is eBay a buy after last month's surge?

eBay trades at a forward P/E ratio of around 10 times following last month's rally. That's dirt cheap compared to the broader market, where the S&P 500 trades at more than 20 times earnings and the tech-heavy Nasdaq fetches over 30 times earnings. That low valuation is driving eBay to boost its share buyback authorization to repurchase more of its attractively priced shares.

However, there's a reason eBay is so cheap. The company is barely growing, with revenue and adjusted earnings only rising about 3% last year. It's working to jump-start growth by reducing headcount and investing in its strategic growth pillars. If the company can accelerate growth, it could produce attractive total returns. That makes it a compelling option for value-seeking investors.