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eBay

Nasdaq:EBAY
Snowflake Description

Outstanding track record with mediocre balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
EBAY
Nasdaq
$39B
Market Cap
  1. Home
  2. US
  3. Software
2017/12/16
Company description

eBay Inc. operates commerce platforms that connect various buyers and sellers worldwide. More info.


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3 Month History
EBAY
Industry
5yr Volatility vs Market

Value

 Is eBay undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of eBay to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of eBay is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for eBay's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are eBay's earnings available for a low price, and how does this compare to other companies in the same industry?
  • eBay is good value based on earnings compared to the US Internet industry average.
  • eBay is good value based on earnings compared to the US market.
Price based on expected Growth
Does eBay's expected growth come at a high price?
  • eBay is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on eBay's assets?
  • eBay is overvalued based on assets compared to the US Internet industry average.
X
Value checks
We assess eBay's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Internet industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Internet industry average (and greater than 0)? (1 check)
  5. eBay has a total score of 2/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (-74.82%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for eBay is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$10,351

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $3,351 × (1 + 2.47%) ÷ (11.2% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$39,319

Present value of terminal value:
$23,120

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$33,471 = $10,351 + $23,120

Value = Total value / Shares Outstanding ($33,471 / 1,045)

Discount to Share Price

Value per share:
$32.04

Current discount (share price of $38.37): -19.75%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 11.2% = 2.47% + (1.16 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($39,275,874,901).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

1.16 = 0.995 (1 + (1- 35%) (25.46%))

Levered Beta used in calculation = 1.16



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is eBay expected to perform in the next 1 to 3 years based on estimates from 35 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
1.6%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is eBay expected to grow at an attractive rate?
  • eBay's earnings growth is positive but not above the low risk savings rate of 4.5%.
Growth vs Market Checks
  • eBay's earnings growth is positive but not above the US market average.
  • eBay's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • eBay's earnings are expected to grow by 1.6% yearly, however this is not considered high growth (20% yearly).
  • eBay's revenue is expected to grow by 5.6% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • eBay is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Internet industry average.
  • A decline in eBay's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess eBay's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
eBay has a total score of 1/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has eBay performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare eBay's growth in the last year to its industry (Internet).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • eBay's year on year earnings growth rate has been positive on average over the past 5 years.
  • eBay's 1 year earnings growth exceeds its 5 year annual average (305% vs 15.5%)
  • eBay's earnings growth has exceeded the US Internet industry average in the past year (305% vs 7.4%).
Earnings and Revenue History
eBay's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Strong return on shareholders funds (ROE > 20%) last year.
  • eBay performed above the US Internet industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) is broadly the same over 3 years.
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Past performance checks
We assess eBay's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Internet industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
eBay has a total score of 6/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is eBay's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up eBay's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • eBay is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • eBay's long term commitments exceed its cash and other short term assets.
Balance sheet
This treemap shows a more detailed breakdown of eBay's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Total debt is not covered by total short term assets, assets are 0.8x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • eBay's level of debt (88.6% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (22.7% vs 88.6% today).
  • Total debt is well covered by annual operating cash flow (27.8%, greater than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 21.1x coverage).
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Financial health checks
We assess eBay's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. eBay has a total score of 3/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is eBay's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from eBay dividends.
If you bought $2,000 of eBay shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Not paying a dividend.
  • Not paying a dividend.
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of eBay's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
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Income/ dividend checks
We assess eBay's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can eBay afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. eBay has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of eBay's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Devin Wenig, image provided by Google.
Devin Wenig
COMPENSATION $15,941,192
AGE 50
TENURE AS CEO 2.4 years
CEO Bio

Mr. Devin N. Wenig has been the Chief Executive Officer and President at eBay Inc. since July 17, 2015. Mr. Wenig served as the President of Global Ebay Marketplaces Business Unit at eBay Inc. since September 6, 2011. Mr. Wenig served as the Chief Executive Officer at Thomson Reuters (Markets) LLC. Mr. Wenig served as the Chief Executive Officer of Markets Division and President of Markets Division at Thomson Reuters Corporation of Thomson Reuters UK Limited until July 31, 2011. He served as President of Business Divisions at Thomson Reuters UK Limited from 2003 to 2006 and served as its Chief Operating Officer since June 15, 2006. Mr. Wenig served as President of Customer Segments at Thomson Reuters UK Limited since February 17, 2003. He served as President of Reuters Information, the global division of Reuters covering full service information and software applications since January 2001. He served as President of Reuters Investment Banking and Brokerage Division of Thomson Reuters PLC. from 2001 to 2003, which is an affiliate of Reuters Limited and Reuters America Inc. from January 2001 to February 2003. Mr. Wenig served as Managing Director of Marketing of Reuters Information since February 2000, Executive Vice President of Marketing at Reuters America and Senior Vice President of Business Development of Reuters America. From October 1998 to February 2000, he served as an Executive Vice President of Marketing of Reuters Holding Switzerland SA. He served as an Executive Director of Thomson Reuters PLC. since February 17, 2003. He served as a Corporate Counsel of Reuters America from 1993 to June 1997. He practiced law at the New York firm of Cravath, Swaine & Moore from 1991 to 1994 as a Mergers and Acquisitions attorney. Mr. Wenig served as Chairman of the Board of Directors of Nastech Pharmaceutical Co. Inc. from June 1991 to March 1999. He has been a Director of Reuters Research Inc. since February 2000. He serves as a Director of a number of Reuter's subsidiaries and portfolio companies and NexCen Brands, Inc. He has been a Director of Instinet Group, LLC since September 2002. He serves as a Director of Predict Inc. Mr. Wenig serves as Director of New York Division at March of Dimes Foundation. He has been a Trustee of The Paley Center for Media since November 19, 2015. He served as a Director of MDRNA, Inc., since June 1991. He has been a Director at eBay Inc. since 2015. He served as a Director of IntraLinks Holdings, Inc. from July 1999 to February 2005. He served as Director for Third Party Data at Reuters from June 1997 to October 1998 and Marina Biotech, Inc. since June 1991. Mr. Wenig holds a B.A. degree from Union College and a J.D. degree from the Columbia University School of Law.

CEO Compensation
  • Devin's compensation has been consistent with company performance over the past year.
  • Devin's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the eBay management team in years:

2.4
Average Tenure
50
Average Age
  • The tenure for the eBay management team is about average.
Management Team

Devin Wenig

TITLE
Chief Executive Officer
COMPENSATION
$16M
AGE
50
TENURE
2.4 yrs

Scott Schenkel

TITLE
Chief Financial Officer and Senior Vice President of Finance
COMPENSATION
$7M
AGE
49
TENURE
2.4 yrs

Steve Fisher

TITLE
Chief Technology Officer and Senior Vice President
COMPENSATION
$8M
AGE
52
TENURE
2.4 yrs

Raymond Pittman

TITLE
Chief Product Officer and Senior Vice President
COMPENSATION
$7M
AGE
47
TENURE
2.4 yrs

Wendy Jones

TITLE
Senior Vice President of Global Operations
TENURE
1.2 yrs

Brian Doerger

TITLE
Chief Accounting Officer and Vice President
AGE
44
TENURE
5.6 yrs

Marie Huber

TITLE
Senior Vice President of Legal Affairs
COMPENSATION
$8M
AGE
56

Dan Tarman

TITLE
Chief Communications Officer and Senior Vice President
TENURE
2.5 yrs

Kristin Yetto

TITLE
Chief People Officer and Senior Vice President
AGE
50
TENURE
2.4 yrs

Jay Lee

TITLE
Senior Vice President of EMEA
AGE
52
TENURE
0.3 yrs
Board of Directors Tenure

Average tenure and age of the eBay board of directors in years:

7.1
Average Tenure
58.9
Average Age
  • The tenure for the eBay board of directors is about average.
Board of Directors

Tom Tierney

TITLE
Non-Executive Chairman
COMPENSATION
$422K
AGE
63
TENURE
2.4 yrs

Devin Wenig

TITLE
Chief Executive Officer
COMPENSATION
$16M
AGE
50
TENURE
2.9 yrs

Fred Anderson

TITLE
Independent Director
COMPENSATION
$338K
AGE
73
TENURE
14.4 yrs

Ned Barnholt

TITLE
Independent Director
COMPENSATION
$327K
AGE
73
TENURE
12.7 yrs

Katie Mitic

TITLE
Independent Director
COMPENSATION
$337K
AGE
47
TENURE
6.3 yrs

Pierre Omidyar

TITLE
Independent Director
COMPENSATION
$25K
AGE
50
TENURE
21.6 yrs

Bob Swan

TITLE
Director
COMPENSATION
$300K
AGE
57
TENURE
2.4 yrs

Bonnie Hammer

TITLE
Independent Director
COMPENSATION
$312K
AGE
66
TENURE
2.9 yrs

Perry Traquina

TITLE
Independent Director
COMPENSATION
$328K
AGE
60
TENURE
2.9 yrs

Tony Bates

TITLE
Independent Director
COMPENSATION
$312K
AGE
50
TENURE
2.8 yrs
Recent Insider Trading
  • eBay insiders have only sold shares in the past 3 months.
Who owns this company?
X
Management checks
We assess eBay's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. eBay has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

eBay Inc. operates commerce platforms that connect various buyers and sellers worldwide. Its platforms enable sellers to organize and offer their inventory for sale; and buyers to find and purchase it virtually. The company’s Marketplace platforms include its online marketplace at ebay.com and the eBay mobile apps; and StubHub platforms comprise its online ticket platform at stubhub.com, and the StubHub mobile apps and Ticketbis platforms that connect fans with their favorite sporting events, shows, and artists, as well as enables them to buy and sell tickets. Its Classifieds platforms include a collection of brands, such as mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen, and others, which offer online classifieds to enable people find whatever they are looking for in their local communities. The company’s platforms enable users to find, buy, sell, and pay for items through various online, mobile, and offline channels that include retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, classifieds, directories, search engines, commerce participants, shopping channels, and networks. eBay Inc. was founded in 1995 and is headquartered in San Jose, California.

Details
Name: eBay Inc.
Ticker: EBAY
Exchange: NasdaqGS
Founded: 1995
Market Cap: $39,275,874,901
Shares outstanding: 1,044,571,141
Website: http://www.ebay.com
Address: eBay Inc.
2025 Hamilton Avenue,
San Jose,
California, 95125,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS EBAY Common Stock Nasdaq Global Select US USD 24. Sep 1998
DB EBA Common Stock Deutsche Boerse AG DE EUR 24. Sep 1998
XTRA EBA Common Stock XETRA Trading Platform DE EUR 24. Sep 1998
SWX EBAY Common Stock SIX Swiss Exchange CH CHF 24. Sep 1998
WBAG EBAY Common Stock Wiener Boerse AG AT EUR 24. Sep 1998
SNSE EBAY Common Stock Santiago Stock Exchange CL USD 24. Sep 1998
BMV EBAY * Common Stock Bolsa Mexicana de Valores MX MXN 24. Sep 1998
BOVESPA EBAY34 BDR EACH REPR 0.5 COM USD0.001 Bolsa de Valores de Sao Paulo BR BRL 06. Mar 2012
BASE EBAY CEDEAR EA REP 1 SHR Buenos Aires Stock Exchange AR ARS 15. Jan 2014
Number of employees
Current staff
Staff numbers
12,600
eBay employees.
Industry
Industry: Internet Software and Services
Sector: Software