Will eBay (EBAY) Miss Earnings Estimates? - Analyst Blog


eBay Inc. ( EBAY ) is set to report fourth quarter 2013 results on Jan 22. Last quarter, it posted a 1.89% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

eBay's third-quarter earnings beat the Zacks Consensus Estimate by a penny. Gross revenue was up both sequentially as well as on a year-over-year basis.

eBay's business continues to show signs of improvement. Both Payments and Marketplaces are showing improving trends versus the year-ago quarter, an indication of the changing business profile. Moreover, the company also possesses a strong balance sheet. Its drive to provide complete online solutions for traditional retailers should further add to its growth going forward.

eBay expects fourth quarter 2013 revenues of $4.50-4.60 billion (up 16.9% sequentially and 14.0% year over year at the mid-point), just short of consensus expectations of $4.64 billion. The company expects to generate GAAP EPS of 67 to 69 cents and non- GAAP EPS of 79 to 81 cents. The non-GAAP EPS guidance is better than the Zacks Consensus Estimate of 74 cents.

Earnings Whispers?

Our proven model does not conclusively show that eBay will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The expected surprise prediction for eBay stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 71 cents.

Zacks Rank #4 (Sell): We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Melco Crown Entertainment Limited ( MPEL ), Earnings ESP of +2.56% and a Zacks Rank #2 (Buy)

Western Digital ( WDC ), Earnings ESP of +0.96% and a Zacks Rank #1 (Strong Buy)

Multimedia Games Holding Company, Inc. ( MGAM ), Earnings ESP of +10.35% and Zacks Rank #1

EBAY INC (EBAY): Free Stock Analysis Report

MULTIMEDIA GAME (MGAM): Free Stock Analysis Report

MELCO CROWN ENT (MPEL): Free Stock Analysis Report

WESTERN DIGITAL (WDC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: EBAY , MGAM , MPEL , WDC



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