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RBP SNAPSHOT : Provides information about the company-in this case,
eBay-as well as the stock price used in this
analysis. The stock price is as of the snapshot date.
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RBP PROBABILITY : There is
97%
chance that the management of
eBay
can deliver the performance required to support a stock price of
$27.66.
WHY IS THIS IMPORTANT? The RBP probability illustrates the likelihood
that
eBay's
management will actually deliver the required business performance to support a
stock price of
$27.66. The higher the probability, the more likely
that
eBay's
management will deliver the performance.
eBay's
value is directly linked to its management's ability to deliver the required
business performance.
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RISK INDICATOR : There is a
3%
chance that
eBay's
management will not be able to deliver the required business performance to
support a stock price of
$27.66.
WHY IS THIS IMPORTANT? The risk indicator is the inverse of the RBP
probability. It is often better to invest according to a company's risk.
Remember, a company with a relatively high probability still has a chance of
not performing. (See
Apple investment example.)
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RBP :
eBay
has to generate revenues of
$8,701.2
million 1 year from now;
$9,687
million 2 years from now; and
$10,675.2
million 3 years from now.
WHY IS THIS IMPORTANT? RBP tells you how much revenue is required to
support
eBay's
stock price of
$27.66. Knowing how much revenue is needed to
support
eBay's
stock price is critical to understanding
eBay's
value. Remember, revenue drives free cash flow, which in turn drives the value
of the company.
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RBP COMPONENTS :
eBay
needs
2,412.4
million listings 1 year from now,
2,544.1
million listings 2 years from now and
2,668.6
million listings 3 years from now.
eBay
needs
826.5
million payments 1 year from now,
906.5
million payments 2 years from now and
979.3
million payments 3 years from now.
eBay
needs advertising & non-transaction revenue of
$413.3
million 1 year from now,
$460.1
million 2 years from now and
$507.1
million 3 years from now.
WHY IS THIS IMPORTANT? Because getting more listings, holding more
auctions, opening more accounts and executing more pay pal payments is what
eBay's
management has to do on a day-to-day basis to drive eBay's revenue.
(NOTE: the granularity of RBP components is directly
dependent on the information disclosed in the company's financial statements.
In some cases, there is a lack of sufficient information to calculate the RBP
components, and we end the calculation at the company's divisional
revenue.)
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% REV : This shows the revenues for each of the RBP components as a
percentage of the total revenue required.
WHY IS THIS IMPORTANT? This shows how much each RBP component
contributes to
eBay's
overall revenue. The bigger the contribution, the bigger the potential impact
on
eBay's
stock price. This would allow the identification of important factors as it
relates to the total revenue contribution.
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LTM
12/07
: This shows the revenue (RBP) and RBP component numbers generated as
of the last 12 months:
December 2007 (12/07).
For the last twelve months ending 12/31/07, they had
2,340.5
million listings.
For the last twelve months ending 12/31/07, they had
716.0
million payments.
For the last twelve months ending 12/31/07, they had
$321.71
million advertising & non-transaction revenue.
WHY IS THIS IMPORTANT? This shows the revenue (RBP) and RBP component
numbers generated as of the last 12 months:
December 2007 (12/07).You should compare the year 1
RBP and year 1 RBP component numbers to the LTM numbers.
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RBP RANK :
eBay
is currently ranked number
1
out of
72
within its sector
(general retailers)
and number
1
out of
16
in its subsector
(specialized consumer services). The median RBP
probability within its sector is
71.60%
and
59.29%
within its subsector.
WHY IS THIS IMPORTANT? The RBP rank allows viewing and comparison of
eBay
vis-à-vis its close competitors. If there are companies ranked below
eBay, then it means there are companies in the
sector/subsector that have a better chance of achieving their RBP to support
their stock prices, and therefore they are probably better investments as
compared with
eBay.
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