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Market Update

Earnings on Tap: eBay

Marketplaces and PayPal should continue to drive growth as eBay evolves into a global commerce hub.

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Global commerce platform and payments leader,  eBay (EBAY) is slated to publish first quarter results Wednesday after the bell. Analysts expect earnings to come in at $0.54 per share, up from $0.44 per share reported in the year-ago period.

For the fourth quarter ended December 2012, the company reported an 18% rise in revenue at $4 billion. Net income reported was $751 million, or $0.57 per diluted share, driven by accelerating growth in both its Marketplaces and Paypal business segments.

"Web-enabled multichannel commerce is evolving quickly, and consumer shopping behavior is changing rapidly. Our focus is on being a global commerce leader in this new environment, connecting buyers and sellers everywhere, and being a preferred multichannel partner of choice for retailers and brands of all sizes," said John Donahoe, president and CEO of the company.

With one of the most capital-efficient models in e-commerce and a wide economic moat grounded in a solid network effect, eBay's role as a global commerce facilitator should translate into excess economic profits, opines Morningstar analyst R.J. Hottovy.

According to Hottovy, Marketplaces and PayPal should continue to drive growth as eBay evolves into a global commerce hub.

The stock is up around 12% on a year-to-date basis but still trades at a discount to Morningstar's fair value estimate.

Gazala Parveen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.