Is eBay Set for More Growth After 70% Rally and Strong Earnings Momentum?

Thinking about what to do with your eBay stock? You are not alone if you have been watching recent price charts and feeling both optimism and caution. Over the last month, eBay shares have soared more than 21%, and looking back even further, the stock is up around 71% in the past year. At first glance, that kind of climb might suggest the easy money has already been made, but things are rarely quite so simple in the world of investing.

Much of this performance has been fueled by a changing landscape for digital commerce and renewed confidence from investors seeking resilient retail platforms. With net income and revenues growing at a solid clip, market sentiment reflects a sense that eBay could be turning the corner with its business strategy. However, some analysts are still debating whether the stock’s recent price tags fully capture the risk and the upside potential, especially with a price now above $99 and a consensus target closer to $88.

That brings us to valuation, the real measure of whether today’s price is attractive or not. By standard metrics, eBay currently earns a valuation score of 3 out of 6, meaning it appears undervalued in half of the usual checks. What does this score actually tell us, and do the numbers reveal opportunity or hidden risk? In the next sections, we will break down each valuation approach, and toward the end, you will find an even more insightful way to size up eBay’s true value story.

eBay delivered 71.5% returns over the last year. See how this stacks up to the rest of the Multiline Retail industry.

Approach 1: eBay Cash Flows

The Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting future free cash flows and then discounting those values back to reflect what they are worth today. It answers the simple question: if you owned all of eBay’s future cash generation, what is that stream worth right now?

Currently, eBay is generating Free Cash Flow of around $1.42 billion, with analyst projections calling for steady, moderate growth in the years ahead. By 2029, eBay’s annual free cash flow is forecast to reach $2.94 billion. This indicates consistent, if not explosive, growth over the next decade.

Using a 2-Stage Free Cash Flow to Equity model, these projections translate to an estimated intrinsic value of $103.74 per share. With eBay’s current market price trading just above $99, the DCF model suggests the stock is about 4.4% undervalued.

In summary, this valuation implies that eBay shares are trading almost exactly in line with their underlying cash-generating power.

Result: ABOUT RIGHT

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out eBay's DCF analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: eBay Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most popular tools for valuing profitable companies like eBay because it directly relates a company’s share price to its bottom-line earnings. Investors and analysts often favor the PE ratio, as it intuitively summarizes how much the market is willing to pay today for a dollar of a company’s earnings.

However, what constitutes a “normal” or “fair” PE ratio can vary depending on the company’s earnings growth prospects and perceived risks. A fast-growing company or a business with highly predictable profits can often justify a higher PE. In contrast, companies facing uncertainty or slow growth typically trade at lower PE multiples.

At present, eBay is trading at a PE ratio of 20.7x. This is below the industry average of 22.8x and significantly below peer averages around 55.2x, which suggests the market is pricing in relatively slower growth or higher risks for eBay compared to its peers. Adding a proprietary perspective, Simply Wall St’s Fair Ratio for eBay stands at 18.0x, factoring in its specific earnings trends, industry fundamentals, profit margins, and risk profile.

Comparing these numbers, eBay’s actual PE is just slightly above its Fair Ratio. The narrow difference between the two signals that the market’s current pricing of eBay is almost perfectly in line with expectations based on its financial profile and outlook.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your eBay Narrative

Beyond the numbers, a Narrative is simply the story you tell yourself about a company. It is what you think will drive its future and why the numbers will turn out the way they will. Narratives connect what is happening in eBay’s business, your expectations for revenue, profit margins, and risk, and ultimately what you believe is a fair value for the stock.

Within Simply Wall St’s platform, Narratives turn complex forecasts into approachable and visual guides, making it easy for millions of investors to map their own view alongside others in the community. By linking a company’s evolving story to updated forecasts and fair value estimates, Narratives help you quickly see when your view suggests eBay is worth buying, selling, or holding compared to its current market price.

Narratives update dynamically, so if earnings, news, or new financial data changes the outlook, your story and its fair value adjust in real time. This keeps your decisions current and connected to reality.

For example, some investors currently believe eBay’s fair value could reach as high as $102.0 per share if AI-driven tools transform margins. Others see risks bringing fair value as low as $50.0, showing how Narratives help capture a full range of perspectives behind each price.

Do you think there's more to the story for eBay? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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