Shanda Interactive Entertainment Ltd.

Company Description

Shanda Interactive Entertainment Ltd. is an interactive entertainment media company that operates online gaming in China. The company was founded in 1999 and has a market cap of $2.2 billion.

Shanda reported strong third-quarter results on Dec 1 that were well ahead of analyst estimates. Revenue was up 42% from last year to $137.3 million. Net income jumped 41.1% to $49.4 million. Earnings came in at 68 cents per share, ahead of analyst estimates 55 cents.

Consistency Pays

This was the fourth time in four quarters that Shanda has surprised and beat analyst estimates, having done so by an average of 9 cents, or 18%.

Share Buyback Program

On Dec 30, Shanda announced its Board of Directors approved the expansion of its share buyback program to $200-$300 million, including $175 million of its outstanding ADS's.

Analyst Estimates

The analyst community continues to remain bullish on Shanda, with the current-year estimate up 14 cents from last month to $2.48 per share. The next-year estimate is bullish, pegged at $2.89, a 16% earnings growth projection.

Valuations

With shares trading at $30, this stock has a forward P/E multiple of 12X, a very reasonable valuation for a company with an impressive growth trajectory.

The Chart

Shares of SNDA have been rallying since bottoming out just below $20 in early December. Since then, this stock has climbed as high as $34, recently settling above a key level of resistance just above $30. Take a look below.