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Should Value Investors Buy eBay (EBAY) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is eBay (EBAY - Free Report) . EBAY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.45, while its industry has an average P/E of 38.81. Over the past 52 weeks, EBAY's Forward P/E has been as high as 14.12 and as low as 10.08, with a median of 13.23.

EBAY is also sporting a PEG ratio of 1.42. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EBAY's PEG compares to its industry's average PEG of 1.80. Within the past year, EBAY's PEG has been as high as 1.49 and as low as 1.01, with a median of 1.39.

Finally, our model also underscores that EBAY has a P/CF ratio of 11.13. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. EBAY's P/CF compares to its industry's average P/CF of 29.66. Over the past 52 weeks, EBAY's P/CF has been as high as 11.66 and as low as -242.33, with a median of 9.82.

These are only a few of the key metrics included in eBay's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, EBAY looks like an impressive value stock at the moment.


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