Assessing eBay Inc’s (NASDAQ:EBAY) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess EBAY’s recent performance announced on 31 March 2018 and evaluate these figures to its longer term trend and industry movements. See our latest analysis for eBay
Was EBAY weak performance lately part of a long-term decline?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine different stocks in a uniform manner using the most relevant data points. For eBay, its most recent earnings (trailing twelve month) is -US$1.64B, which, against the previous year’s figure, has turned from positive to negative. Given that these values may be relatively nearsighted, I’ve computed an annualized five-year figure for eBay’s earnings, which stands at US$2.48B.
We can further analyze eBay’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years eBay has seen an annual decline in revenue of -6.50%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 26.70% over the past year, and 18.27% over the past five years. This shows that whatever uplift the industry is profiting from, eBay has not been able to realize the gains unlike its average peer.
What does this mean?
eBay’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues eBay may be facing and whether management guidance has steadily been met in the past. You should continue to research eBay to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EBAY’s future growth? Take a look at our free research report of analyst consensus for EBAY’s outlook.
- Financial Health: Is EBAY’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.