eBay Inc (NASDAQ:EBAY) is showing that it intends to remain at the forefront of the online retail industry, embracing the shift to mobile technologies and broadening the array of industries it serves. Its first-quarter results are a reflection of the progress it continues to make in these regards.
It reported first-quarter earnings of $0.63 per share, a year-over-year gain of $0.08. The stock dipped slightly following the report, probably reflecting a lower-than-anticipated outlook for the June quarter. Still, the online auctioneer and payment service provider looks for full year 2013 share profits to climb 15% on a similar rate of sales growth.
The gist is that each of eBay’s key units are performing well, and in fact, growing sharply in terms of revenues and income. A more complete discussion is as follows:
Growing site activity and volumes
Compared to the same period last year, eBay Inc (NASDAQ:EBAY)’s base of active users rose 13% in the previous quarter. The mobile revolution has not missed eBay, as this and other technology improvements allowed for sales volumes to increase at the same percentage. Citing fashion and ticket-based merchandise as growth drivers, the company, despite being a seasoned online marketplace participant, is reaping benefits from the shift of commerce to the Internet that is undoubtedly persisting.
PayPal providing a substantial boost
eBay’s popular electronic payment technology saw its revenue advance 18% in the quarter, behind a 16% hike in the number of registered accounts to 128 million in total. Payment volumes rose even faster, growing 21%.
What eBay Inc (NASDAQ:EBAY) is doing right in this business is that it is investing in subscriber acquisition, as well as developing new products and expanding internationally. The company is testing offline payment methods in retail outlets across the U.S., an initiative in line with the evolving retail atmosphere.
A couple of months ago, I had analyzed a number of payment services stocks in a blog. One of the companies looked at was Fiserv, Inc. (NASDAQ:FISV), a stock that has been on an upward trajectory as its earnings prospects are outstanding.
Fiserv primarily targets banks and financial institutions, and thus, should be in good shape as its end markets spend on technology and it further expands its market share. In fact, management is calling for earnings growth of 15% to 18% this year, as revenue is buoyed by the recent acquisition of Open Solutions, a provider of account processing technology for financial institutions. Fiserv is essentially a growth stock and might well have further positive momentum.
The other company discussed was Global Payments Inc (NYSE:GPN).
Global Payments generates its revenue from high-volume electronic transactions. Its volumes have been increasing nicely, thanks to Independent Sales Organizations in the U.S., along with heightened business with gaming companies and international expansion.
However, costs edged up a bit as a proportion of revenue recently, partly due to commissions expense jumps. The resulting sell-off of the company’s shares may well have created a buying opportunity for those looking to invest in the sector.
Coming back to eBay, if you believe like I do that it is operating in a conducive environment for growth, marked by the proliferation of smartphones, tablets, and so forth, while also factoring in its position in advanced payment technologies, the shares may be appealing. The company plans to utilize capital for acquisitions, in addition to its share repurchase program, and the stock could be positively impacted.
On the other hand, growth at PayPal might slow further with the entrance of more competition like the entities mentioned above. In sum, the soft outlook was only a modest setback, and eBay Inc (NASDAQ:EBAY) shares look to be a good holding for most portfolios.
The article What eBay’s Earnings Report Tells Us originally appeared on Fool.com.
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