EBay Inc Retains Buy Recommendation

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- eBay (Nasdaq: EBAY) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. 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 ratings report include:
  • EBAY's revenue growth has slightly outpaced the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 13.4%. 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 0.17 is very low, it is currently higher than that of the industry average. To add to this, EBAY has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
  • EBAY INC has improved earnings per share by 14.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, EBAY INC increased its bottom line by earning $2.18 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($2.98 versus $2.18).
  • Net operating cash flow has increased to $1,713.00 million or 23.68% 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 23.85%.

eBay Inc. provides online platforms, tools, and services to help individuals and merchants in online and mobile commerce and payments in the United States and internationally. eBay has a market cap of $68.8 billion and is part of the services sector and retail industry. The company has a P/E ratio of 20.00, above the S&P 500 P/E ratio of 18.00. Shares are down 3.1% year to date as of the close of trading on Wednesday.

You can view the full eBay Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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