Should You Splurge on AMZN, EBAY or GRPN for Cyber Monday?

Updated from 12:01 p.m. to reflect Amazon's neutral move in share price.

NEW YORK (TheStreet) -- Wall Street is gift-wrapping a bargain on some e-commerce stocks on Monday as investors flee despite consumers readying to drop big bucks for Cyber Monday. Groupon (GRPN) tumbled 4.9% and Amazon  (AMZN) was flat by early afternoon. Investors remain confident in auctioneer eBay (EBAY) which has soared 2.4% to $51.71.

And why wouldn't they be confident -- the figures show consumers are choosing to shop in the comfort of their own homes more than ever before. ComScore estimates online sales surged 17.3% on Thanksgiving and Black Friday over the year earlier and that e-spending will increase 16% over the entire holiday season. On Black Friday alone, online retailers saw a record-breaking $1.2 billion in sales.

Goldman Sachs has released a report rating various high-profile internet names, including Amazon, eBay and Groupon. On Amazon, the investment firm reiterates its "buy" rating and ups its price target to $450 from $400.

"We believe Amazon, as the e-commerce leader, is the largest beneficiary of accelerating ecommerce growth and is well positioned to continue to outpace the growth of ecommerce by taking share in new verticals and geographies, leveraging its scale, infrastructure, technology investments, existing customer base, and considerable expertise," wrote Goldman Sachs in its report.

The firm reiterated its "buy" rating and $63 price target for eBay on the company's "potential for reacceleration in 2014."

Groupon, however, was downgraded to "neutral" from "buy" with its price target a dollar lower to $11.

"We no longer believe GRPN deserves a premium valuation on decelerating revenue growth, and believe the risk/reward in owning GRPN is adequately reflected at current levels," wrote Goldman Sachs analysts.

In other news, Amazon CEO Jeff Bezos revealed on Sunday's 60 Minutes the company is testing delivery via drone, a project expected to be in operation in 4 to 5 years.

TheStreet Ratings team rates EBAY INC as a Buy with a ratings score of A-. The team has this to say about its recommendation:

"We rate eBay Inc (EBAY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EBAY's revenue growth has slightly outpaced the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although EBAY's debt-to-equity ratio of 0.20 is very low, it is currently higher than that of the industry average. To add to this, EBAY has a quick ratio of 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $1,334 million or 15.59% when compared to the same quarter last year. Despite an increase in cash flow, EBAY INC's average is still marginally south of the industry average growth rate of 23.70%.
  • EBAY INC has improved earnings per share by 17.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EBAY INC reported lower earnings of $1.99 a share vs. $2.46 a share in the prior year. This year, the market expects an improvement in earnings ($2.70 vs. $1.99).

TheStreet Ratings team rates Amazon.com Inc as a Hold with a ratings score of C. The team has this to say about its recommendation:

"We rate Amazon.com Inc (AMZN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues rose by 23.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $1,389 million or 47.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 36.42%.
  • Powered by its strong earnings growth of 85.00% and other important driving factors, this stock has surged by 58.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income increased by 85% when compared to the same quarter one year prior, rising from -$274 million to -$41 million.
  • The gross profit margin for Amazon.com Inc is currently lower than what is desirable, coming in at 32.53%. Regardless of AMZN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.23% trails the industry average.

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