eBay Earnings Preview: Will it Miss? - Analyst Blog

eBay Inc. (EBAY) is set to report second quarter 2013 results on Jul 17. Last quarter, it posted a 3.7% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

eBay's strength at PayPal, fast-growing presence in the mobile space and reinvigorated Marketplaces business all led to higher sales growth rates in the first quarter of 2013. The continuous introduction of new solutions to enhance the mobile shopping experience and rapid consumer adoption also contributed to higher sales.

The sale of low-value items and increased expenditure on the launch of various new products contained gross margin expansion in the last quarter.

For the second quarter, eBay expects to generate GAAP EPS of 48 to 50 cents and non GAAP EPS of 60 to 62 cents.

Earnings Whispers?

The Zacks Consensus Estimate for the second quarter stands at 54 cents per share while that for fiscal 2013 stands at $2.40.

eBay has beaten estimates in all of the last four quarters, with a trailing four-quarter average positive surprise of 5.87%.

There have been no estimate revisions in the last 30 and 60 days. As a result, the Zacks Consensus Estimate for the second quarter as well as for 2013 has remained unchanged over the same time frame. The stock carries a Zacks Rank #3 (Hold).

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Our model states that a stock needs to have both a positive earnings expected surprise prediction or ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You could, therefore, consider the following stocks instead:

SanDisk Corp. (SNDK), with an ESP of +4.55% and a Zacks Rank #1 (Strong Buy)

Syntel Inc. (SYNT), with an ESP of +3.81% and a Zacks Rank #1 (S! trong Buy)

Scientific Games Corporation (SGMS), with an ESP of +100.0% and a Zacks Rank #2 (Buy)