eBay Inc. (NASDAQ:EBAY)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited considerable fluctuation across the observed periods. Initially, there was a notable decline from $2,846 million in 2014 to $1,944 million in 2015. Subsequently, the figure demonstrated a slight increase to $1,955 million in 2016, followed by a sharp decrease to $821 million in 2017. However, the year 2018 showed a strong recovery with NOPAT rising significantly to $2,553 million.

Cost of Capital

The cost of capital demonstrated a gradual decline over the five-year period, decreasing from 15.56% in 2014 to 13.85% in 2018. This trend indicates an improving financing environment or lower risk perception associated with the company’s capital structure.

Invested Capital

Invested capital experienced a steep decline from $20,937 million in 2014 to $7,328 million in 2015, representing a substantial reduction in the capital base. Following this, the levels of invested capital remained relatively stable, with minor fluctuations, ending at $7,597 million in 2018. The overall trend points to a significant contraction in invested capital during the early part of the period, followed by stabilization.

Economic Profit

Economic profit showed a volatile pattern throughout the years. In 2014, it was negative at -$411 million, shifted to positive territory with $900 million in 2015 and remained similarly positive at $873 million in 2016. This was followed by a return to negative territory in 2017 at -$166 million. The year 2018 marked a substantial positive rebound to $1,501 million, indicating improved value creation relative to the cost of capital.

Summary Insights

The company’s profitability and value creation metrics fluctuated considerably during the observed period. The sharp decline in both NOPAT and invested capital in 2015 suggests possible divestitures or restructuring activities that significantly altered the asset base. The consistent decrease in the cost of capital indicates favorable conditions for the company’s financing or risk profile. The volatility in economic profit aligns with the fluctuations in both NOPAT and invested capital, underscoring periods of reduced and enhanced value generation. The robust recovery in NOPAT and economic profit in 2018 points to an improved operational performance and effective capital deployment during that year.

The financial data reveals notable fluctuations in profitability over the five-year period.

Net Income (Loss)

The net income shows significant volatility. It increased markedly from 46 million US dollars in 2014 to a peak of 7,266 million US dollars in 2016, indicating strong profitability during this period. However, there was a sharp decline in 2017, with a net loss of 1,016 million US dollars, signaling a challenging financial year. In 2018, the net income rebounded to a positive 2,530 million US dollars, suggesting a recovery but not returning to the peak levels observed in 2016.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrated a declining trend from 2,846 million US dollars in 2014 to 821 million US dollars in 2017, reflecting a gradual erosion of operating profitability over these years. Nonetheless, 2018 saw a significant improvement to 2,553 million US dollars, nearly returning to the level seen in 2014. This recovery in NOPAT suggests enhanced operational efficiency or better cost management in the last year of the period.

Overall, the data illustrates a period of growth followed by a downturn and partial recovery. The volatility in net income is more pronounced than in NOPAT, which may indicate that factors beyond core operations—such as extraordinary items or financial costs—impacted net profitability, particularly in 2017. The improvements in 2018 across both indicators suggest a positive shift in financial performance.

Provision (benefit) for income taxes

The provision for income taxes exhibited significant volatility over the period analyzed. In 2014, the provision was substantially positive, amounting to 3,485 million US dollars, indicating a considerable tax expense. This value sharply decreased to 459 million US dollars in 2015. In 2016, the provision turned negative to -3,634 million US dollars, signaling a tax benefit rather than an expense. However, in 2017, the provision reverted to a positive figure of 3,288 million US dollars before dropping again to 190 million US dollars in 2018. This pattern suggests considerable fluctuations in taxable income or changes in tax regulations affecting the reported tax expense or benefit.

Cash operating taxes

Cash operating taxes demonstrated a generally declining trend from 2014 through 2016, starting at 659 million US dollars in 2014 and slightly decreasing to 505 million US dollars in 2016. A notable spike occurred in 2017, with cash operating taxes rising sharply to 1,600 million US dollars, which is more than a threefold increase compared to the previous year. This sudden increase might reflect a higher cash tax payment or changes in tax payment timing. In 2018, cash operating taxes fell substantially to 378 million US dollars. Overall, the data indicate variability in the company's cash tax payments, with the exceptional increase in 2017 representing a significant deviation from prior and subsequent years.

Total reported debt & leases

The total reported debt and leases showed fluctuations over the analyzed period. Starting at 8,046 million USD at the end of 2014, the figure decreased to 6,985 million USD in 2015. However, it then increased sharply to 9,172 million USD in 2016 and further rose to a peak of 10,296 million USD in 2017. In 2018, the total reported debt and leases slightly declined to 9,746 million USD. Overall, the trend suggests a general increase in debt levels, especially from 2015 to 2017, followed by a minor reduction in 2018.

Stockholders’ equity

Stockholders’ equity experienced significant volatility during the period. It started at a relatively high level of 19,906 million USD in 2014, then declined substantially to 6,576 million USD in 2015. There was a partial recovery in 2016, with equity rising to 10,539 million USD, but this was not sustained in subsequent years. Equity decreased again to 8,063 million USD in 2017 and further declined to 6,281 million USD by the end of 2018. The overall pattern indicates considerable erosion of equity value compared to the initial year, with notable declines after 2016.

Invested capital

Invested capital mirrored the general downward trend observed in stockholders’ equity, beginning at 20,937 million USD in 2014 and decreasing sharply to 7,328 million USD by 2015. From 2015 to 2018, invested capital remained relatively stable but low, fluctuating around the 6,900 to 7,600 million USD range. This indicates a significant contraction in the invested capital base post-2014, with minimal recovery through to the final year observed.

Summary

The overall financial pattern presents a scenario of increasing leverage as evidenced by rising total reported debt after 2015, contrasted against declining stockholders’ equity and reduced invested capital. The significant drop in equity and invested capital in 2015 could suggest a major restructuring, asset reduction, or other strategic adjustments affecting the capital structure. The leverage increase may indicate a higher reliance on debt financing over the latter years, potentially affecting the company's financial stability and risk profile.

Economic Profit

The economic profit exhibited significant fluctuations over the five-year period. It started with a negative value of -411 million USD at the end of 2014, then sharply increased to a positive peak of 900 million USD in 2015. This positive trend was sustained in 2016 with a profit of 873 million USD. However, 2017 saw a decline back to negative territory at -166 million USD, before rebounding strongly to the highest value of 1501 million USD in 2018. This indicates periods of both substantial value creation and erosion, with a notably strong recovery at the end of the period.

Invested Capital

Invested capital experienced a sharp decrease from 20,937 million USD in 2014 to 7,328 million USD in 2015. Subsequently, it stabilized with minor fluctuations, amounting to 7,687 million USD in 2016, declining to 6,903 million USD in 2017, and then increasing again to 7,597 million USD in 2018. This suggests a significant divestment or reduction in the capital base between 2014 and 2015, followed by relative stability with slight growth in the later years.

Economic Spread Ratio

The economic spread ratio followed a volatile path, reflecting the changes in economic profit relative to invested capital. It began at a negative -1.97% in 2014, indicating returns below cost of capital. This sharply improved to 12.28% in 2015 and then slightly decreased to 11.35% in 2016, remaining positive and indicating value creation. In 2017, the ratio turned negative again to -2.4%, consistent with the negative economic profit that year. A substantial recovery occurred in 2018 with a peak ratio of 19.76%, the highest across the observed timeframe, demonstrating significantly improved profitability and efficiency in capital usage.

The financial data over the five-year period reveals notable fluctuations and varying trends in the key performance indicators examined.

Economic Profit

Economic profit demonstrates significant volatility throughout the analyzed period. Beginning with a negative value of -411 million USD in 2014, it improved markedly to a positive 900 million USD in 2015 and further increased to 873 million USD in 2016. However, a sharp decline is observed in 2017, where economic profit turned negative again at -166 million USD, before rebounding to a new peak of 1501 million USD in 2018. This indicates irregular profitability cycles with a robust recovery in the latest year noted.

Adjusted Net Revenues

Adjusted net revenues show a generally upward trajectory with some inconsistencies. The revenue value starts fairly high at 17,932 million USD in 2014, sharply decreases to 8,590 million USD in 2015, and experiences a moderate increase in the subsequent years: 8,983 million USD in 2016, 9,574 million USD in 2017, and reaching 10,779 million USD in 2018. The initial steep drop followed by a steady rise suggests either a change in accounting methods or operational restructuring that impacted revenue recognition.

Economic Profit Margin

The economic profit margin follows a pattern similar to economic profit itself. After a negative margin of -2.29% in 2014, it increases substantially to 10.48% in 2015, slightly dips to 9.71% in 2016, then decreases sharply to -1.73% in 2017, before recovering impressively to 13.93% in 2018. This fluctuation highlights periods of both diminished and enhanced profitability relative to revenues, closely mirroring changes in economic profit levels.

Overall, the company's profitability metrics exhibit alternating phases of decline and recovery, with both economic profit and profit margin experiencing significant downturns in 2017 but showing strong rebounds by 2018. Adjusted net revenues, despite an initial large drop after 2014, generally increase in the later years, suggesting improving operational performance or adjusted revenue recognition policies. The data suggests that the company managed to improve its economic profitability margin considerably in the final year observed, pointing to stronger cost management or more effective revenue generation strategies in 2018.