eBay 360-Degree Earnings Preview (EBAY)

eBay Inc. (NASDAQ: EBAY) is set to report earnings after the close today.  Despite international acquisitions and despite management changes, eBay for the most part remains a domestic story for auctions as far as the investment community is concerned.  PayPal continues to remain the true gem and adding the biggest value to investors.

Thomson Reuters has earnings estimates of $0.57 EPS and $3.32 billion in revenues.  The company previously offered fourth quarter guidance as follows:

• revenues of $3.2 to $3.35 billion; and non-GAAP earnings of $0.55 to $0.58 EPS; and GAAP earnings of $1.47 to $1.53 EPS (GAAP included the gain from the sale of our remaining equity interest in Skype).

The company offers guidance routinely, and the coming (current) quarter has estimates of $0.54 EPS and $3.16 billion in revenues.  In case the company goes far out on a limb for 2012 guidance, Thomson Reuters sees earnings growing by 15% in 2012 to $2.31 EPS on sales growth of nearly 18% to $13.66 billion.

The sales growth seems a bit high but eBay did manage to grow revenues during and after the recession.  The company also has about $7 billion in total liquidity (as of September 30, 2011) against a market capitalization of about $39 billion today.

Investors will want to pay close attention to the chart provided by StockCharts.com (see below).  Shares have not been able to move much above $31.50 and the stock is under key long-term averages.  eBay’s 50-day moving average is $30.54 and the 200-day moving average is $31.19.  With shares down about 1.1% at $30.20, those moving average are important.  A breakdown would make for serious resistance ahead, but if good news sends shares higher then there may be a lot of support under the stock.

Options expire in just 48 hours, so the price is almost all event-driven rather than real time value. Our take is that options traders are braced for a move of just over $1.00 in either direction based upon current put and call trading.

JON C. OGG