Will eBay (EBAY) Beat Earnings Estimates? - Analyst Blog

eBay Inc. EBAY is set to report first-quarter 2014 results on Apr 29. Last quarter, it posted in-line results. 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 increased the sales growth rates in the fourth quarter of 2013. The continuous enhancement of the mobile shopping experience and rapid consumer adoption also contributed to the higher sales.

The sale of low-value items and increased expenditure on the product launches contained gross margin expansion in the last quarter.

For the first quarter, eBay expects revenues within the range of $4.150–$4.250 billion, which was short of consensus expectations of $4.30 billion. The company expects to generate a GAAP EPS of 51 to 53 cents and a non-GAAP EPS of 65 to 67 cents, better than the Zacks Consensus Estimate of 57 cents.

Earnings Whispers?

Our proven model does not conclusively show that eBay will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 57 cents. Hence, the difference is 0.00%.

Zacks Rank: eBay's Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #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

You could consider other stocks with a positive earnings ESP and Zacks Rank #1, 2 or 3 such as:

North American Palladium Ltd. PAL, with Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy).

Salix Pharmaceuticals Ltd. SLXP, with Earnings ESP of +29.27% and a Zacks Rank #1.

Advanced Energy Industries, Inc. AEIS, with Earnings ESP of +10.00% and a Zacks Rank #1.