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eBay (EBAY) Gears Up for Q3 Earnings: What's in the Cards?

Zacks Equity Research

eBay EBAY is set to report third-quarter 2019 results on Oct 23. In the last reported quarter, Teradyne delivered a positive earnings surprise of 9.68%.

The company beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average positive surprise of 10.35%.

Performance in the Last Reported Quarter

eBay had reported second-quarter 2019 non-GAAP earnings of 68 cents per share, which surpassed the Zacks Consensus Estimate by 6 cents and increased 28.3% from the year-ago period.

Gross revenues of $2.69 billion increased 2% year over year (up 4% on an Fx-neutral basis) and surpassed the Zacks Consensus Estimate by 0.5%.

Let’s see how things are shaping up for this announcement.

eBay Inc. Price and EPS Surprise

 

eBay Inc. Price and EPS Surprise

eBay Inc. price-eps-surprise | eBay Inc. Quote

Marketplace Active Buyers to Drive Growth

eBay’s accelerated Artificial Intelligence efforts through personalization, image search technology and customer support are expected to have enhanced the Marketplace platform.

The company has been providing more data to its marketplace sellers, including price and restocking guidance, as well as more insight into inventory such as demand signals for the right products, price, and timing. This is expected to have benefited the to-be-reported quarter.

Notably, eBay offers a local feature that allows customers to buy something online and then pick it up at a local store when convenient. This is likely to have reduced shipping costs and boosted the Marketplace business.

Advertising & Payment Platform to Benefit eBay

eBay progressed well with the payment and advertising business in the third quarter, backed by robust growth in Promoting Listings.

Core Platform Strength to Drive Net Transaction Revenues

In a bid to increase total net transaction revenues, eBay has been strengthening its core platform and improving user experience. This is likely to have aided the quarter to be reported.

The company has been accelerating efforts to build product catalogs on structured data, enhance mobile platform, roll out browse-inspired shopping journeys, rejuvenate customer-to-customer business and strengthen its brand. This is likely to have contributed to its top line in the third quarter.

Overhangs

Heightening competition in the e-commerce market from companies like Amazon and Wal-Mart might have affected the company during the quarter.

eBay's increased investment toward overall platform technology and slower growth rate than its peers might have also hampered earnings.

Earnings Whispers

Our proven model shows that eBay is unlikely to beat estimates in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, eBayhas a Zacks Rank #3.

Stocks That Warrant a Look

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post a positive earnings surprise in the quarter to be reported.

Cadence Bancorp CADE has an Earnings ESP of +6.12% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Veoneer, Inc. VNE has an Earnings ESP of +7.14% and a Zacks Rank #2.

Arrow Electronics, Inc. ARW has an Earnings ESP of +0.60% and a Zacks Rank of 3.

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