At Current Prices, eBay Provides Considerable Value (EBAY)

Jul. 7.06 | About: eBay Inc. (EBAY)

eBay (NASDAQ:EBAY) is the world's biggest and most dominant online auctioneer. The company's annualized free cash flow has grown faster than earnings and have also grown by at least 50% for each of its last eight quarters. Even though annualized cash flow has grown from $658 million to $1.7 billion over its last 24 months its shares have considerable value as they are trading near a 2-year low (the stock closed at $26.85 yesterday).

EBAY 2-yr chart:

EBAY 2-yr chart

The following two graphs are what lead me to believe that EBAY should outperform the market in the future:

(click to enlarge)
EBAY 5-yr

We also need to look at the 20 quarter chart to get the real picture.

EBAY 20Q

Here you can see what I am getting at and why this stock is poised to do well. If you go down to line 11, you will see the Free Cash flow trailing twelve month growth and it is above 50 for the last 8 quarters. In addition, this is also the higest free cash yield (3.1%) over the last 20 quarters.