With a month to the end of the year, some investors are beginning to determine which companies could exceed expectations in the next year. Although eBay has suffered losses around 5.3% in the month since the last earnings report, below the USA500, which makes very few enthusiastic about the company’s earnings which are currently trading 15 times lower, there are some reasons for optimism. One important factor is dividends, which are an important contributor to the return on long-term investments but only if the dividend continues to be paid.
Another factor is the fact that the company has a low and conservative payment rate of only 18% of its income after taxes; on the other hand, cash flow is usually more important than profits to assess the sustainability of dividends, meaning that eBay must verify if it has generated enough cash to pay its dividends, where last year only 23% of its cash flow was paid. This is positive because eBay’s dividend is covered by both earnings and cash flow, making the dividend sustainable.
Third-quarter 2020 non-GAAP earnings for eBay was 85 cents a share, beating the estimate by 11.8%, and the bottom line also improved 64% year-over-year, but also decreased 21.3% sequentially. While net income of $2.61 billion exceeded the estimate by 5%, the figure also increased 25% from the prior year quarter.
In turn, the history of high and low prices in the 52-week period recorded much about the current state of the stock and the future performance of the company, where its shares were positioned -15.24% lower than the high price and 98.90% higher than the lowest price, while the price range of the stock within the same period managed to maintain the performance between $26.02 and $61.06.
eBay saw 5% year-on-year growth in its active buyer base to 183 million at the end of the third quarter, prompting the company to focus on its growing initiatives to strengthen paid offers, such as growth initiatives that are based on improving the seller experience and thus being able to offer innovative tools for the seller, delivering a better buyer experience through the use of structured data.
Another factor that can provide valuable information to stay positive on eBay is the debt-to-equity ratio, which is calculated by dividing a company’s current total liabilities by equity. Debt-to-equity is a valuable metric that describes the debt that the company is using to back the assets correlating with the value of the equity, which the company has established at 2.65 points.
Fibo levels: MONTHLY, WEEKLY, DAILY LAST RANK
Ebay has a current price of 50.52, this after its recent positive momentum that began in March, when from 26.00 it managed to break the Fibo 61.8% at 31.59, the 32.8% at 45.00, tand finally the psychological level 50. We are currently in what looks like a bullish flag in the form of a retracement with last support 46.30, as well as the 21- and 200-daily SMAs. Resistance is at the 100-day SMA, as well as the previous highs of the flag. In case the assets breaks decisively above the flag and in the long term the asset manage to break even the 2015 peak (66.71), then the next levels to be seen would be between 80 and the Fibo 127.2 at 79.01.
Aldo Weidner Zapien, Market Analyst – HF Office of Education – Mexico
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