Retail ETFs to Ride on eBay Earnings: More Room to Run?

Shares of eBay Inc. EBAY gained about 6% in after-hours trading on Jul 17, thanks to both its bottom and top-line beats and a raised profit outlook.

This e-commerce giant’s second-quarter 2019 earnings beat the Zacks Consensus Estimate by 6 cents. Also, pro-forma earnings of 68 cents improved 28% year over year. Further, net revenues of $2.687 billion inched up 2% year over year. Revenues too surpassed the Zacks Consensus Estimate of $2.674 billion by a whisker. About 4% more buyers on the site benefited revenues.

Inside the Upbeat Guidance

eBay lifted its full-year profit guidance for 2019. The company now expects full-year non-GAAP earnings from continuing operations in the $2.70-$2.75range from $2.64-$2.70 projected during the release of first-quarter earnings.

This happened despite the cut in revenue growth projections. The company now expects net revenues between $10.75 billion and $10.83 billion, down from the previous outlook of $10.83-$10.93 billion.

For the third quarter, eBay expects revenues to grow 1-3% on an Fx-neutral basis to $2.61-$2.66 billion. The Zacks Consensus Estimate for third-quarter revenues is pegged at $2.679 billion. Non-GAAP earnings are expected within 62-65 cents while the Zacks Consensus Estimate was 62 cents.

ETFs in Focus  

The stock sports a Zacks Rank #1 (Strong Buy) at the time of writing. While it belongs to a top-ranked Zacks industry (top 16%), its VGM Score is an unimpressive C. Shares of eBay have added about 39% since the beginning of the year compared with the S&P 500 Index's rally of 19.1%.

Though the pressure on revenue growth is palpable in the earnings scorecard, investors should also note that the post-earnings gains in the stock will spread to some e-Bay heavy retail ETFs (read: June Retail Sales Beat Forecast: ETF & Stock Winners).

Moreover, the basket approach is safer than the single-stock picking route as it alleviates the stock-specific weakness.

Invesco Dynamic Retail ETF PMR

The 30-stock fund brings eBay into focus at the sixth spot with about 5.05% exposure. The fund charges 63 bps in fees. The fund has a Zacks Rank #2 (Buy) (read: 5 Top-Ranked ETFs & Stocks on Sale).

ProShares Online Retail ETF ONLN

The underlying ProShares Online Retail Index is a specialized retail index that tracks retailers who principally sell online or through other non-store channels. eBay takes the seventh position in the fund. The fund charges 58 bps in fees.

Global X E-commerce ETF EBIZ

The 39-stock fund seeks to invest in companies positioned to benefit from the increased adoption of e-commerce as a distribution model including companies with principal business in operating e-commerce platforms and providing e-commerce software plus services. The fund puts 4.21% weight in e-Bay. The fund charges 68 bps in fees (read: S&P 500 Hits New High: 10 Top-Performing ETFs YTD).

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eBay Inc. (EBAY) : Free Stock Analysis Report
 
Invesco Dynamic Retail ETF (PMR): ETF Research Reports
 
Global X E-commerce ETF (EBIZ): ETF Research Reports
 
ProShares Online Retail ETF (ONLN): ETF Research Reports
 
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