E-commerce company eBay (NASDAQ:EBAY) was certainly one of the massive movers on Wednesday after posting surprisingly good earnings results and raising its dividend. The firm’s outlook also left investors feeling positive concerning the stock.

eBay’s share price was up by about 7% on Wednesday, trading at around $47.50 per share. Yr to this point, the stock is up by about 9%. Should investors buy now on eBay?

Strong quarter yields dividend raise

The vacation quarter was a superb one for eBay as its revenue rose 2% to $2.6 billion within the fourth quarter, higher than the $2.5 billion revenue estimate amongst analysts. It was fueled by a 2% year-over-year increase in gross merchandise volume (GMV) to $18.6 billion. While GMV within the U.S. was flat within the quarter at $8.9 billion, international GMV was up 4% to $9.7 billion. Nevertheless, the variety of energetic buyers was down 2% at 132 million.

eBay also recorded an enormous boost in first-party promoting revenue, which got here in at $368 million, up 33% yr over yr. Total promoting revenue was $393 million within the quarter, representing 2.1% of GMV.

Nevertheless, eBay’s operating expenses were up 14% yr over yr to $1.4 billion, and its operating income was down 27% to $410 million. The operating margin dropped to 16% from 22.5% within the fourth quarter of 2022. Expenses were up across the board with increases in product development, sales and marketing, and general and administrative expenses. Nevertheless, on the underside line, eBay’s net income got here in at $728 million or $1.40 per share, which also beat projections.

Amongst its latest initiatives within the quarter, eBay rolled out a latest combined shipping program that allows buyers to buy multiple items from one seller at reduced shipping costs. It also launched a latest generative AI-powered social caption generator, which is designed to make social sharing easier for sellers.

As well as, the firm increased its dividend for the sixth consecutive yr, boosting it 8% to 27 cents per share. eBay pays out a strong 2.25% dividend yield.

For the total yr, eBay saw its revenue hit $10.1 billion, up 3% for the yr, although its GMV fell 1% to $73.2 billion. Net income amounted to $2.8 billion or $5.21 per share, up from a $1.3 billion net loss in 2022. Further, eBay reported a healthy $2.4 billion of operating money flow and $2 billion of free money flow, with an operating margin of 19.2%.

“Our fortress balance sheet and sturdy financial model enabled us to speculate in our strategic pillars while protecting earnings growth and delivering robust capital returns,” said Steve Priest, chief financial officer of eBay, within the earnings release. “I’m pleased with the strong execution throughout 2023, and I’m confident our strategy will drive long-term shareholder value.”

Do you have to “buy now?”

The e-commerce giant expects $2.5 billion to $2.54 billion in revenue for the primary quarter of 2024, which could be roughly according to the identical quarter a yr ago. Earnings per share (EPS) is predicted to be between 86 cents and 90 cents for Q1, or $1.19 to $1.23 on an adjusted basis. The outlook for revenue and adjusted EPS was higher than analysts had anticipated, which helped fuel Wednesday’s rally in eBay stock.

It is difficult not to love eBay for its balance sheet, liquidity, reliable dividend and low valuation. It’s trading at just 9 times earnings and 10 times forward earnings, so it looks like a good value. Nevertheless, I’m undecided it has enough earnings growth potential, particularly within the near-term, to maneuver the needle an excessive amount of for investors. Thus, while eBay is a good stock value watching, investors can probably find some higher options on the market without delay.

Disclaimer: All investments involve risk. On no account should this text be taken as investment advice or constitute responsibility for investment gains or losses. The knowledge on this report shouldn’t be relied upon for investment decisions. All investors must conduct their very own due diligence and seek the advice of their very own investment advisors in making trading decisions.