First Eagle Investment (Trades, Portfolio) purchased a 1,935,555-share stake in eBay (EBAY, Financial)Â for an average price of $24.12 during the second quarter. The trade had a 0.12% impact on First Eagle’s portfolio.
Since the trade eBay’s market price has gained an estimated 33% in value.
EBay has a market cap of $36.16 billion, a price-earnings (P/E) ratio of 19.52, an enterprise value of $37.13 billion and a price-book (P/B) ratio of 5.63.
Headquartered in San Jose, California, eBay is an American multinational corporation and ecommerce company that provides consumer-to-consumer and business-to-business sales services via the Internet. The company manages eBay.com, which is an online auction and shopping website.
As of December 2015 eBay had over 800 million items listed for sale on its platforms, which the company believes makes it one of the world’s largest online marketplaces. In 2015, approximately 59% of the company's gross merchandise value (GMV) was generated outside the U.S. according to its most recent 10-K filing.
EBay also owns StubHub which is a leader in secondary ticketing for event tickets, enabling fans to buy and sell tickets to a large selection of sports, concerts, theater and other live entertainment events. Together eBay and StubHub combined for approximately $82 billion in gross merchandise value in 2015. Approximately $78 billion came from its marketplace, and the remaining $3.5 billion came from StubHub.
GuruFocus gives eBay a 6 of 10 financial strength rating with a cash-debt ratio of 0.89 ranking it lower than 52% of the 943 companies in the Global Specialty Retail industry. The company has an Altman Z-Score of 3.50 indicating that it is in the safe zone and is not in danger of filing for bankruptcy in the near future. The company also has a 5 of 10 profitability and growth rating with an operating margin of 27.14%, a net margin of 22%, an ROE of 21.18% and an ROC (Joel Greenblatt (Trades, Portfolio)) of 128.32% ranking it above 94% of the companies in its industry.
A noteworthy statistic for eBay is that it has a three-year average share buyback ratio of 2.90 ranking it above 85% of the 499 companies in the Global Specialty Retail Industry.
It’s possible eBay wanted to boost some of its ratios including its ROE and its ROA which were -43.02% and -22.68% on March 28, 2014. This was partially due to the fact that the company’s tax rate was 134% in 2014, which was primarily due to the recognition in 2014 of deferred tax liabilities of approximately $3.0 billion of U.S. income and applicable foreign withholding taxes on $9.0 billion of undistributed foreign earnings of certain of its foreign subsidiaries for 2013 and prior years according to its most recent 10-K filing.
First Eagle likely purchased a stake in eBay because the company is established with more than a decade of experience in its industry. EBay also has more than one revenue source as it generates another income stream from StubHub. Over the past year eBay’s market price has gained an estimated 23% in value, and over the previous five years the company’s market price has increased by an estimated 137%.
First Eagle Investment (Trades, Portfolio) is an independent investment firm that was founded in 1864. First Eagle likes to focus on a long-term value investing strategy when purchasing securities. The investment firm has 356 stocks in its portfolio with a total value of $39.252 billion.
Disclosure:Â Author does not own any shares in this company.
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