Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
eBay Inc., current price multiples
| eBay Inc. | Amazon.com Inc. | Home Depot Inc. | Lowe’s Cos. Inc. | TJX Cos. Inc. | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Current share price (P) | $35.62 | |||||
| No. shares of common stock outstanding | 813,525,054 | |||||
| Growth rate (g) | 26.97% | |||||
| Earnings per share (EPS) | $3.11 | |||||
| Next year expected EPS | $3.95 | |||||
| Operating profit per share | $2.73 | |||||
| Sales per share | $13.21 | |||||
| Book value per share (BVPS) | $7.72 | |||||
| Valuation Ratios (Price Multiples) | ||||||
| Price to earnings (P/E) | 11.45 | 34.67 | 20.66 | 15.96 | 26.04 | |
| Price to next year expected earnings | 9.02 | 29.55 | 5.31 | 3.68 | 18.83 | |
| Price-earnings-growth (PEG) | 0.42 | 2.00 | 0.07 | 0.05 | 0.68 | |
| Price to operating profit (P/OP) | 13.04 | 33.67 | 14.00 | 10.46 | 19.93 | |
| Price to sales (P/S) | 2.70 | 3.76 | 1.78 | 1.23 | 2.37 | |
| Price to book value (P/BV) | 4.61 | 6.55 | 22.83 | — | 14.04 | |
Based on: 10-K (reporting date: 2018-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
eBay Inc., historical price multiples
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
The valuation multiples for the period between 2014 and 2018 exhibit significant variance in earnings-based metrics while demonstrating relative stability in operational and asset-based ratios.
- Price to Earnings (P/E)
- Extreme volatility is observed in the P/E ratio, characterized by an anomalous peak of 1,433.64 in 2014, which suggests an exceptionally low net income during that fiscal year. A sharp correction followed in 2015, with the ratio falling to 16.36, and further declining to 4.79 in 2016. By 2018, the ratio moderated to 12.32, indicating inconsistent market pricing relative to bottom-line profitability.
- Price to Operating Profit (P/OP)
- The P/OP ratio remained comparatively stable throughout the analysis period. The metric fluctuated within a consistent range, starting at 18.77 in 2014, reaching a low of 12.84 in 2015, and peaking at 18.93 in 2017 before closing at 14.03 in 2018. This stability suggests that the valuation of core operational efficiency was viewed more consistently by the market than net earnings.
- Price to Sales (P/S)
- A period of expansion in the P/S ratio is evident from 2015 to 2017, where the ratio rose from 3.28 to a peak of 4.48. However, a significant contraction occurred in 2018, with the ratio dropping to 2.90, the lowest value recorded in the five-year span, indicating a reduction in the premium assigned to the company's revenue generation.
- Price to Book Value (P/BV)
- A general upward trend is observed in the P/BV ratio, moving from 3.31 in 2014 to 4.96 in 2018. Although a temporary decline to 3.30 occurred in 2016, the ratio reached its highest point of 5.32 in 2017, signaling an overall increase in market valuation relative to the company's accounting book value.
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Price to Earnings (P/E)
eBay Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 914,880,451 | 1,012,079,673 | 1,087,042,601 | 1,178,705,177 | 1,210,046,829 | |
| Selected Financial Data (US$) | ||||||
| Net income (loss) (in millions) | 2,530) | (1,016) | 7,266) | 1,725) | 46) | |
| Earnings per share (EPS)2 | 2.77 | -1.00 | 6.68 | 1.46 | 0.04 | |
| Share price1, 3 | 34.08 | 42.37 | 32.03 | 23.94 | 54.50 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 12.32 | — | 4.79 | 16.36 | 1,433.64 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | — | — | — | — | — | |
| Lowe’s Cos. Inc. | — | — | — | — | — | |
| TJX Cos. Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Data adjusted for splits and stock dividends.
2 2018 Calculation
EPS = Net income (loss) ÷ No. shares of common stock outstanding
= 2,530,000,000 ÷ 914,880,451 = 2.77
3 Closing price as at the filing date of eBay Inc. Annual Report.
4 2018 Calculation
P/E ratio = Share price ÷ EPS
= 34.08 ÷ 2.77 = 12.32
5 Click competitor name to see calculations.
The valuation of the common stock exhibited significant volatility between 2014 and 2018, characterized by wide fluctuations in earnings per share and resulting price-to-earnings multiples.
- Earnings Per Share (EPS) Volatility
- Earnings demonstrated substantial instability throughout the period. Starting from a marginal $0.04 in 2014, EPS rose to $1.46 in 2015 and peaked at $6.68 in 2016. A sharp reversal occurred in 2017, with earnings falling to -1.00, before recovering to $2.77 in 2018.
- Price to Earnings (P/E) Ratio Analysis
- The P/E ratio showed extreme variance, reflecting the impact of unstable earnings. An outlier was recorded in 2014 with a ratio of 1,433.64, a result of the negligible EPS relative to the share price. The ratio normalized to 16.36 in 2015 and reached a period low of 4.79 in 2016, coinciding with the highest recorded EPS. Following a period of negative earnings in 2017 where the ratio was not applicable, the P/E stabilized at 12.32 in 2018.
- Share Price and Valuation Correlation
- Share price movements did not consistently align with earnings performance. The price decreased significantly from $54.50 in 2014 to $23.94 in 2015, despite a rise in EPS. Conversely, the share price reached its peak of $42.37 in 2017, the same year earnings turned negative, indicating that market sentiment during that period was decoupled from immediate annual profitability.
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Price to Operating Profit (P/OP)
eBay Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 914,880,451 | 1,012,079,673 | 1,087,042,601 | 1,178,705,177 | 1,210,046,829 | |
| Selected Financial Data (US$) | ||||||
| Income from operations (in millions) | 2,222) | 2,265) | 2,325) | 2,197) | 3,514) | |
| Operating profit per share2 | 2.43 | 2.24 | 2.14 | 1.86 | 2.90 | |
| Share price1, 3 | 34.08 | 42.37 | 32.03 | 23.94 | 54.50 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 14.03 | 18.93 | 14.98 | 12.84 | 18.77 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | — | — | — | — | — | |
| Lowe’s Cos. Inc. | — | — | — | — | — | |
| TJX Cos. Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Data adjusted for splits and stock dividends.
2 2018 Calculation
Operating profit per share = Income from operations ÷ No. shares of common stock outstanding
= 2,222,000,000 ÷ 914,880,451 = 2.43
3 Closing price as at the filing date of eBay Inc. Annual Report.
4 2018 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 34.08 ÷ 2.43 = 14.03
5 Click competitor name to see calculations.
The five-year period ending December 31, 2018, is characterized by significant volatility in equity valuation contrasted with a steady recovery in operating performance following a downturn in 2015.
- Share Price Performance
- A sharp decline occurred between 2014 and 2015, with the price dropping from 54.50 to 23.94. A recovery trend followed, reaching a peak of 42.37 in 2017, before receding to 34.08 by the end of 2018.
- Operating Profit per Share
- Operating profit experienced a reduction in 2015, falling to 1.86 from 2.90. However, a consistent upward trajectory was established thereafter, with annual increases leading to a value of 2.43 by December 31, 2018.
- Price to Operating Profit (P/OP) Ratio
- The P/OP ratio exhibited fluctuations, starting at 18.77 in 2014 and reaching a low of 12.84 in 2015. The ratio expanded to 18.93 in 2017, coinciding with the peak share price, before contracting to 14.03 in 2018. This final decline occurred despite the continued growth in operating profit per share, indicating a compression in the valuation multiple during the 2018 fiscal year.
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Price to Sales (P/S)
eBay Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 914,880,451 | 1,012,079,673 | 1,087,042,601 | 1,178,705,177 | 1,210,046,829 | |
| Selected Financial Data (US$) | ||||||
| Net revenues (in millions) | 10,746) | 9,567) | 8,979) | 8,592) | 17,902) | |
| Sales per share2 | 11.75 | 9.45 | 8.26 | 7.29 | 14.79 | |
| Share price1, 3 | 34.08 | 42.37 | 32.03 | 23.94 | 54.50 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 2.90 | 4.48 | 3.88 | 3.28 | 3.68 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | — | — | — | — | — | |
| Lowe’s Cos. Inc. | — | — | — | — | — | |
| TJX Cos. Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Data adjusted for splits and stock dividends.
2 2018 Calculation
Sales per share = Net revenues ÷ No. shares of common stock outstanding
= 10,746,000,000 ÷ 914,880,451 = 11.75
3 Closing price as at the filing date of eBay Inc. Annual Report.
4 2018 Calculation
P/S ratio = Share price ÷ Sales per share
= 34.08 ÷ 11.75 = 2.90
5 Click competitor name to see calculations.
Between 2014 and 2018, the valuation multiples exhibited significant volatility, characterized by a mid-period expansion followed by a sharp contraction in the final year. The price-to-sales (P/S) ratio fluctuated between a high of 4.48 and a low of 2.90, reflecting shifting market sentiment relative to revenue performance.
- Price to Sales (P/S) Ratio Trends
- The P/S ratio experienced a slight decline from 3.68 in 2014 to 3.28 in 2015. A period of valuation expansion followed, with the ratio climbing to 3.88 in 2016 and peaking at 4.48 in 2017. This upward trajectory suggests an increase in the premium investors were willing to pay per dollar of sales. However, this trend reversed sharply in 2018, as the ratio fell to 2.90, the lowest point within the five-year period.
- Revenue Performance and Valuation Correlation
- A substantial decrease in sales per share occurred between 2014 and 2015, dropping from 14.79 to 7.29. From 2016 through 2018, sales per share demonstrated a consistent recovery, increasing annually to 8.26, 9.45, and finally 11.75. Despite this steady growth in revenue per share, the share price did not follow a linear path, peaking in 2017 at 42.37 before declining to 34.08 in 2018.
- Analysis of the 2018 Divergence
- A notable divergence is observed in 2018. While sales per share reached their highest level since 2014, the share price decreased. This inverse relationship resulted in a significant contraction of the P/S multiple. The decrease in the ratio despite improving sales per share indicates a compression in valuation multiples, suggesting that the market discounted the revenue growth during that fiscal year.
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Price to Book Value (P/BV)
eBay Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 914,880,451 | 1,012,079,673 | 1,087,042,601 | 1,178,705,177 | 1,210,046,829 | |
| Selected Financial Data (US$) | ||||||
| Stockholders’ equity (in millions) | 6,281) | 8,063) | 10,539) | 6,576) | 19,906) | |
| Book value per share (BVPS)2 | 6.87 | 7.97 | 9.70 | 5.58 | 16.45 | |
| Share price1, 3 | 34.08 | 42.37 | 32.03 | 23.94 | 54.50 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 4.96 | 5.32 | 3.30 | 4.29 | 3.31 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | — | — | — | — | — | |
| Lowe’s Cos. Inc. | — | — | — | — | — | |
| TJX Cos. Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Data adjusted for splits and stock dividends.
2 2018 Calculation
BVPS = Stockholders’ equity ÷ No. shares of common stock outstanding
= 6,281,000,000 ÷ 914,880,451 = 6.87
3 Closing price as at the filing date of eBay Inc. Annual Report.
4 2018 Calculation
P/BV ratio = Share price ÷ BVPS
= 34.08 ÷ 6.87 = 4.96
5 Click competitor name to see calculations.
An analysis of the valuation multiples from 2014 to 2018 reveals a volatile relationship between market price and book value, characterized by a general expansion of the Price to Book Value (P/BV) ratio despite a significant decline in the underlying book value per share.
- Price to Book Value (P/BV) Ratio Trends
- The P/BV ratio exhibited significant fluctuation, starting at 3.31 in 2014 and reaching a peak of 5.32 in 2017. After a brief return to 3.30 in 2016, the ratio remained elevated in the latter part of the period, ending at 4.96 in 2018. This trend indicates that the market attributed a higher premium to the company's net assets in 2017 and 2018 than it did in 2014 and 2016.
- Book Value per Share (BVPS) Dynamics
- A sharp contraction in book value per share occurred between 2014 and 2015, where the value dropped from 16.45 to 5.58. While a recovery to 9.70 was noted in 2016, the BVPS followed a downward trajectory thereafter, closing at 6.87 in 2018. This represents a substantial overall decrease in the accounting value of the equity available to shareholders.
- Market Price Impact
- The share price experienced high volatility, falling from 54.50 in 2014 to 23.94 in 2015, before recovering to 42.37 in 2017. The expansion of the P/BV ratio in 2017 and 2018 was driven by the fact that the share price recovered more aggressively than the book value per share, which remained significantly below 2014 levels.
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