Simple Concepts Research Group

Is Now The Time To Buy eBay (NASDAQ: EBAY)?

May 9, 2022


ebay company valuation

eBay (EBAY) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for eBay (EBAY) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

eBay Fundamentals

EBAY Stock Rating

Stock Price Target: $75.91

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for eBay in comparison to the Online Retail industry and the S&P 500.

eBay is a Large Cap company with a Market Cap of $28.6B.

How are investors using eBay earnings yield to assess the company?

eBay (EBAY)_ Earnings Yield in Comparison to the Online Retail Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for eBay is 7.81%, in comparison to 4.80% for the S&P 500 and 3.12% for the 10-year treasury bond. The median earnings yield for the Online Retail industry is 3.81%.

What does eBay Price-to-Earnings Ratio (P/E) tell investors about the company?

eBay (EBAY)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Online Retail Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

eBay does not currently have a reported P/E ratio. The P/E for the Online Retail industry is 50.28 and the P/E for the S&P 500 is 20.84.

What is the current Price-to-Sales Ratio (P/S) for eBay?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

eBay is currently trading at a P/S of 2.98. The P/S for the Online Retail industry is 3.53 and the P/S for the S&P 500 is 2.63.

How does eBay Price-to-BookRatio (P/B) compare to the Online Retail industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

eBay P/B ratio is 2.91. The P/B for the Online Retail industry is 12.9 and the P/B for the S&P 500 is 4.09.

How attractive is eBay Return on Invested Capital (ROIC) to investors?

eBay (EBAY)_ Return on Invested Capital in Comparison to the Online Retail Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

eBay ROIC is currently -13.70% in comparison to 5.90% for the Online Retail industry and 9.10% for the S&P 500.

eBay (EBAY)_ Price Target & 52-Week Price Range

How has EBAY stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, eBay has traded between the range of $47.29 and $81.19.

The current Analyst Price Target for eBay is $75.91.

What is eBay YOY Performance in comparison to its industry and the total market?

The YOY performance for eBay is -18.35%. The Online Retail industry has a YOY performance of -30.68% in comparison to the YOY S&P 500 performance of -0.99%.

eBay (EBAY)_ YOY Performance in Comparison to the Online Retail Industry and the S&P 500

Recent Financial Results

  • Revenue of $2.5B, down 6% on an as-reported basis
  • Gross Merchandise Volume of $19.4B, down 20% on an as-reported basis
  • GAAP and Non-GAAP EPS per diluted share of $(2.28) and $1.05, respectively
  • GAAP and Non-GAAP operating margin of 27.9% and 32.4%, respectively
  • Returned $1.4B to shareholders in Q1, including $1.25B of share repurchases and $129M paid in cash dividends

Stock Price Target: $75.91


Company Overview

EBAY Stock Rating

eBay Inc. operates marketplace platforms that connect buyers and sellers in the United States and internationally. The company’s Marketplace platform includes its online marketplace at ebay.com and the eBay suite of mobile apps. Its platforms enable users to list, buy, sell, and pay for items through various online, mobile, and offline channels that include retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, directories, search engines, commerce participants, shopping channels, and networks. The company was founded in 1995 and is headquartered in San Jose, California.

Be sure to add eBay (EBAY) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.