eBay Inc. (NASDAQ:EBAY) and Genuine Parts Company (NASDAQ:GPC) are both Services companies that recently hit new low. This price action has ruffled more than a few feathers in the investment community, but is one a better investment than the other? To answer this, we will compare the two companies across growth, profitability, risk, return, dividends, and valuation measures.
eBay Inc. (NASDAQ:EBAY) operates in the Specialty Retail, Other segment of the Services sector. The company has grown sales at a -5.10% annual rate over the past five years, putting it in the low growth category. EBAY has a net profit margin of 80.40% and is more profitable than the average company in the Specialty Retail, Other industry. In terms of efficiency, EBAY has an asset turnover ratio of 0.37. This figure represents the amount of revenue a company generates per dollar of assets. EBAY’s financial leverage ratio is 1.3, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 67.00%, which is better than the Specialty Retail, Other industry average ROE.
Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 1.78. Company trades at a P/E ratio of 5.55 , and is less expensive than the average stock in the Specialty Retail, Other industry. The average investment recommendation for EBAY, taken from a group of Wall Street Analysts, is 2.50, or a hold.
Over the past three months, eBay Inc. insiders have been net buyers, dumping a net of -191,372 shares. This implies that insiders have been feeling relatively bearish about the outlook for EBAY. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. EBAY has a beta of 1.37 and therefore an above average level of market volatility.
Genuine Parts Company (NYSE:GPC) operates in the Specialty Retail, Other segment of the Services sector. GPC has increased sales at a 4.20% CAGR over the past five years, and is considered a low growth stock. The company has a net profit margin of 4.30% and is more profitable than the average Specialty Retail, Other player. GPC’s asset turnover ratio is 1.74 and the company has financial leverage of 1.86. GPC’s return on equity of 21.20% is better than the Specialty Retail, Other industry average.
Genuine Parts Company (GPC) pays a dividend of 2.70, which translates to dividend yield of 3.05% based on the current price. Stock has a payout ratio of 56.70%. According to this ratio, GPC should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 0.46 and has a P/E of 19.86. Compared to the average company in the 12.47 space, GPC is relatively expensive. The average analyst recommendation for GPC is 2.90, or a hold.
Genuine Parts Company insiders have sold a net of 0 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, GPC’s beta of 1.13 indicates that the stock has an above average level of market risk.
eBay Inc. (NASDAQ:EBAY) scores higher than Genuine Parts Company (NYSE:GPC) on 7 of the 13 measures compared between the two companies. EBAY has the better fundamentals, scoring higher on profitability, leverage and return metrics. EBAY wins on valuation measures.