We expect online retailer
eBay Inc.
(
EBAY
) to beat expectations when it reports fourth quarter 2012
results on January 16th.
Why a Likely Positive Surprise?
Our proven model shows that eBay is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
The Earnings Surprise Prediction or ESP, which represents the
difference between the Most Accurate estimate and the Zacks
Consensus Estimate, is at 3.28%. This is very meaningful and a
leading indicator of a likely positive earnings surprise for
shares.
Zacks Rank #2 (Buy):
Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings estimates. The
sell-rated stocks (Zacks Rank #4 and #5) should never be
considered going into an earnings announcement.
The combination of eBay's Zacks Rank #2 (Buy) and 3.28% ESP
makes us very confident about looking for a positive earnings
beat on January 16th.
What is Driving the Better than Expected Earnings?
eBay's impressive business strategy, strength atPaypal,
opportunities in the fast-growing mobile space, restructuring at
its PayPal business unit and overall strength in eCommerce are
expected to drive results in the upcoming quarter.
PayPal, which accounts for almost half of eBay's annual
revenue, is expanding beyond its online payments service.
PayPal's point of sale (POS) represents an incremental growth
driver, given its focus on the top 20 national retailers, a few
of which have already agreed to accept PayPal as a payment mode.
eBay's agreement with Discover has also opened up PayPal access
to more than 7 million merchant locations, expanding its
addressable market.
As smartphone migration continues, eBay is seeing great
opportunities in the mobile space. The PayPal Mobile Express
Checkout system and the Zong acquisition will boost the company's
mobile payment volumes. According to management, PayPal expects
to process $10 billion in mobile payments this year.
The positive trend is seen in the trailing four-quarter
average surprise of8.83%.
Other Stocks to Consider
eBay is not the only firm looking up this earnings season. We
also see likely earnings beats coming from these 2 industry
peers:
Amazon.com Inc. (
AMZN
), Earnings ESP of +20.69% and ZacksRank #3 (Hold)
Netflix Inc. (
NFLX
), Earnings ESP of +8.33% and Zacks Rank #3 (Hold)
About Earnings ESP
Would you like to own more stocks likely to beat their next
earnings report? And avoid stocks likely to disappoint?
If yes, then it's time you learn about the Earnings ESP score
available on Zacks.com.
AMAZON.COM INC (AMZN): Free Stock Analysis
Report
EBAY INC (EBAY): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis
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