Shares of eBay EBAY rest near their 18-month low as we approach the e-commerce firm's third-quarter earnings release. But eBay's growth outlook appears pretty strong, so should investors consider buying eBay stock right now?
EBay, which spun off PayPal PYPL in 2015, has struggled mightily over the last year. In an effort to offer their sellers and buyers more options, eBay announced earlier this year that it will stop using PayPal as its back-end payments service after 2020.
The e-commerce firm signed a new agreement with Adyen, with eBay set to slowly transition buyers and sellers to its new payment system over the next several years. Investors should note that the Amsterdam-based payments firm boasts Uber, Spotify SPOT , Gap GPS , and other big companies as its clients.
EBay has also pushed to stand out beyond its online thrift store image through new partnerships and advertisings campaigns to fight against Amazon AMZN and traditional retailers that have expanded their e-commerce presence in recent years. This includes agreements with Disney's DIS ESPN, which includes making sports-related eBay items "discoverable" on EPSN.com and its mobile platforms. The company, which also owns online ticket marketplace StubHub, rolled out a new ad campaign to market itself as a place to buy on-trend items from fashion to toys.
The company saw its active buyer base jump 4% last quarter to reach 175 million around the world. EBay's Q2 revenues climbed roughly 9% to reach $2.64 billion, while its gross merchandise volume popped 10% to $23.6 billion.
Stock Performance & Valuation
Moving on, we can see that eBay stock has struggled over the last two years, falling well behind the larger e-commerce industry. Worst still, shares of eBay have plummeted over 15% in the last 12 months and roughly 12% during the past three months. EBay stock currently rests near its 18-month low and closed Tuesday at $33.28 per share.
The e-commerce firm's decline has made its valuation picture appear a bit better than it has been. EBay is currently trading at 16.4X forward 12-month Zacks Consensus EPS, which represents a significant discount compared to its industry's 37.6X average. Plus, eBay is trading well below its year-long high of 25.4X and its one-year median of 20.1X. And we can see that eBay is currently trading near its one-year low.
Outlook & Earnings Trends
Looking ahead, EBay's Q3 revenues are expected to jump 10.5% to reach $2.66 billion, based on our current Zacks Consensus Estimate. Meanwhile, the e-commerce firm's full-year revenues are projected to climb by over 13% to hit $10.82 billion.
EBay's adjusted quarterly earnings are projected to pop by 14.6% to $0.55 per share. The company's fiscal year EPS figure is expected to expand by 15% to reach $2.30 per share. The company has also seen some positive upward earnings estimate revision activity for Q3 as well as fiscal 2018 and 2019, over the last 30 days.
The e-commerce firm's recent positive earnings revision trends help eBay claim a Zacks Rank #2 (Buy). With that said, eBay has only beat our quarterly earnings estimates twice in the last six quarters. Therefore, it might be wise to just keep an eye on eBay to see if it can gain any post-earnings momentum.
EBay is expected to release its quarterly financial results on Wednesday, October 17.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Walt Disney Company (DIS): Free Stock Analysis Report eBay Inc. (EBAY): Free Stock Analysis Report Amazon.com, Inc. (AMZN): Free Stock Analysis Report PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report The Gap, Inc. (GPS): Free Stock Analysis Report Spotify Technology SA (SPOT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research