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Changyou.com (CYOU) Q2 Earnings: Is a Surprise in Store?
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Changyou.com Limited is set to report second-quarter 2016 results on Aug 1. Last quarter, the company delivered a positive earnings surprise of 10.91%. Also, the company delivered positive earnings surprises in the last four quarters, bringing the average to 68.82%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Changyou has gained recognition for its offerings like Tian Long Ba Bu (TLBB) and Blade Online. However, these days, the popularity of PC games is dwindling because of rapid migration to mobile games. To keep up with the change, Changyou has stepped up its R&D efforts to develop more innovative and user friendly mobile games, leveraging its own huge PC games user base. In the last reported quarter, Changyou and Tencent struck a licensing deal for TLBB mobile games. The company said that it was betting big on Tencent’s distribution capabilities along with its research in hard core games to bring erstwhile PC game players to mobile.
However, Changyou is facing operational challenges from the ongoing transition. Also, sluggish online game and advertising businesses continue to hurt margins. Increasing competition remains an added concern.
Our proven model does not conclusively show that Changyou is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Changyou currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 56 cents.
Zacks Rank: Changyou has a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Innoviva, Inc.(INVA - Free Report) with an Earnings ESP of +25.00% and a Zacks Rank #1.
GoDaddy Inc. (GDDY - Free Report) with an Earnings ESP of +50.00% and a Zacks Rank #3.
Expedia Inc. (EXPE - Free Report) with an Earnings ESP of +6.82% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Changyou.com (CYOU) Q2 Earnings: Is a Surprise in Store?
Changyou.com Limited is set to report second-quarter 2016 results on Aug 1. Last quarter, the company delivered a positive earnings surprise of 10.91%. Also, the company delivered positive earnings surprises in the last four quarters, bringing the average to 68.82%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Changyou has gained recognition for its offerings like Tian Long Ba Bu (TLBB) and Blade Online. However, these days, the popularity of PC games is dwindling because of rapid migration to mobile games. To keep up with the change, Changyou has stepped up its R&D efforts to develop more innovative and user friendly mobile games, leveraging its own huge PC games user base. In the last reported quarter, Changyou and Tencent struck a licensing deal for TLBB mobile games. The company said that it was betting big on Tencent’s distribution capabilities along with its research in hard core games to bring erstwhile PC game players to mobile.
However, Changyou is facing operational challenges from the ongoing transition. Also, sluggish online game and advertising businesses continue to hurt margins. Increasing competition remains an added concern.
CHANGYOU.COM Price and EPS Surprise
CHANGYOU.COM Price and EPS Surprise | CHANGYOU.COM Quote
Earnings Whispers
Our proven model does not conclusively show that Changyou is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Changyou currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 56 cents.
Zacks Rank: Changyou has a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Innoviva, Inc.(INVA - Free Report) with an Earnings ESP of +25.00% and a Zacks Rank #1.
GoDaddy Inc. (GDDY - Free Report) with an Earnings ESP of +50.00% and a Zacks Rank #3.
Expedia Inc. (EXPE - Free Report) with an Earnings ESP of +6.82% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>