Why eBay (EBAY) Is Falling Today

NEW YORK (TheStreet) -- EBay EBAY fell 2% to $54.06 on Thursday following a ChannelAdvisor report that same-store holiday sales rose just 9.6% through December 22 compared to sales from the same period in 2012.

EBay's same-store sales paled in comparison to Amazon's (AMZN) 25.2% same-store sales increase during the holiday spending period through December 22 according to ChannelAdvisor.

In the week before Christmas, from December 16 to December 22, eBay same-store sales increased by 18.1% from the same time last year. Amazon's same-store sales rose 38.9% in the same time period

Piper Jaffray analyst Gene Munster wrote in a note to investors that eBay is on track to meet analyst expectations in the fourth quarter despite the same-store sales. Munster maintained his $63 target price for the stock.

TheStreet Ratings team rates EBAY INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their 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 9.1%. 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 $1,334.00 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 23.64%.
  • 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 versus $2.46 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $1.99).

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