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Thursday, October 22, 2009

eBay Delivers the Goods - Accelerating Growth with Continued Large Excess Cash Generation

As with our Yahoo! (YHOO, $17.66) post the other day, we'll keep this brief as eBay's (EBAY, $25.03) results will be extensively covered by the media. We previously highlighted eBay's competitive advantages and significant free cash generation. Below, we include some informative slides from yesterday's earnings call presentation.

Organic revenue growth of 5% Y/Y, an improvement from 1% last quarter:

Steady free cash flow generation that keeps building cash on the company's balance sheet:

And, a still high ROIC, although weighed down by acquisitions over the past year -- expect improvement over time:

The Market seems to be disappointed with the company's December quarter outlook, but we are pleased with improved Y/Y organic revenue growth and performance across business segments (detail available in full management presentation) in the September quarter. After all, how many companies are actually growing the top-line organically in the current environment? Not many.

We expect the company's well-positioned assets to continue generating significant excess cash flow and growth, supported by favorable secular trends.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long EBAY, YHOO.
© 2009 Jeffrey Walkenhorst
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