eBay delivers again

Challenges come and challenges go but one thing seems to remain: eBay's bottom line keeps growing.

The latest struggles include a slowdown in new listings and underperformance by Skype. Despite this, revenue grew 30% and earnings increased by 53% thanks to a one-time tax benefit.

Here are the key take-aways from the Q3 earnings report and conference call:

• Organic revenue growth was 23%
• PayPal is still growing at a rate of over 30%
• The performance of eBay America and Germany is still not where the executives would like it to be
• Skype and advertising revenue are still growing at an almost 3 figure rate
• Margins will come under pressure next year as eBay invest more in their products to keep the competition at bay.

So there is plenty for Meg and co to think about. But I expect the earnings growth to continue at a rate of at least 25%. So if eBay makes $1.80 next year and is awarded a multiple of 25 that gives it a price target of $45.

eBay is well diversifed as over half of its revenues are now from overseas. It would be likely to perform well in a recession as more users would turn to it to save money.

So it looks like eBay is still a buy below $40. I already have my full allocation - unfortunately all bought above $40 - so I will be cheering from the sidelines.