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Thursday, January 21, 2010

eBay Again Delivers the Goods - Growth Accelerates and Cash Keeps Building

We've commented on eBay (EBAY, $22.23) in the past, noting that we like the company's competitive advantages and significant free cash generation.

eBay reported 4Q09 results yesterday that further illustrate the company's still relevant presence (despite hub-bub over Amazon/AMZN, $125.78) and large, consistent cash generation. For those interested, we recommend giving a look at the results and presentation. Below, we highlight a few interesting slides.

Overall revenue shows solid Y/Y growth:

Free cash generation continues:

PayPal is strong, yet core e-commerce platform holding its own:

Cash building (including proceeds from Skype sale):

With a current free cash yield to equity holders of approximately 8%, shares are no longer in the bargain bin. Still, the valuation isn't stretched like AMZN or egregious like Blue Nile (NILE, $55.35). We're comfortable holding our shares and remain confident in future earnings power.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long EBAY.
© 2010 Jeffrey Walkenhorst
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