Online Dusty Attic ($EBAY Earnings Preview)

eBay (EBAY) is set to report Q1 results tonight after the close with a conference call to follow at 5pm ET. 

Current Consensus stands at EPS of $0.45 on Revenues of $2.08 bln.

Shares of EBAY were blasted following the Q4 report. EBAY managed to report an in line quarter, but downside guidance to both Q1 and FY16 led to selling pressure that would drop the stock 13%. EBAY shares were able to settle at the $22 level in mid-February and have been able to climb back toward $25 ahead of tonight's report.

An attractive valuation has been the primary driver for the move back through the post-earnings gap down. An attractive valuation is all that's saving the stock right now.

Guidance

• EBAY expects Q1 revenue in the range of $2.05-2.10 bln; Sees EPS in the range of $0.43-0.45
• FY16 EPS in the range of $1.82-1.87; Sees revenues in the range of $8.5-8.8 bln.

Key Metrics

• Total Gross Merchandise Value- Q4 was $21.86 bln which was flat y/y and up approx 11% q/q.
• Operating Margin- Q4 saw its OpMargin fall 230 bps to 34.4% as FX headwinds and increased competition weighed on results.

Q2 Recap

• EBAY reported Q4 (Dec) earnings of $0.50 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.50. Revenues were unchanged from the year-ago period at $2.32 bln.
  • GMV was ~flat at $21.9 bln.
• Co issued downside guidance for Q1, seeing EPS of $0.43-0.45, excluding non-recurring items, vs. then-$0.48 Capital IQ Consensus Estimate; Co projected Q1 revs in the range of $2.05-2.10 bln vs. then-$2.16 bln Capital IQ Consensus Estimate.
• Co issued downside guidance for FY16, seeing EPS of $1.82-1.87, excluding non-recurring items, vs. then-$1.98 Capital IQ Consensus Estimate. Co projected revenue in the range of $8.5-8.8 bln vs. then-$9 bln Capital IQ Consensus Estimate.
  • EBAY said that it may seek additional outside financing to replace 2016 maturities and provide financial flexibility. So we would be on the look out for any refinancing.
  • EBAY said it expected to continue buying shares throughout 2016, at or above the rate of 2H15. This would be in addition to offsetting dilution. EBAY repurchased $550 mln shares in Q4.