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What's in the Cards for Sohu.com (SOHU) in Q2 Earnings?
Sohu.com Inc. (SOHU - Free Report) is set to report second-quarter 2016 results on Aug 1. Let’s see how things are shaping up for this announcement.
Factors at Play
Sohu seems well positioned to benefit from strong traffic growth in search, online video and mobile businesses. The company expects strength in Sohu Video, Sogou and Changyou in the to-be reported quarter. Sogou is likely to benefit from increased investment in its search division.
Changyou’s strong R&D capabilities and a massive user base (owing to TLBB games) are likely to add to the company’s top line.
However, Sohu is a relatively small player in the online advertising market and continuing investments in product development are necessary to expand its market share.
For the past few months, the company’s business has been impacted by volatile macroeconomic conditions in China, in addition to persisting sluggishness in its brand advertising business. Furthermore, the company has been cutting down its spending levels, which makes market share gain more difficult due to stiffening competition from peers. On the other hand, the company’s investments in product development continue to weigh on its financials.
In June, the company backed off from its earlier proposal of a $600 million equity and debt investment. In Dec 2015, the company’s CEO, Charles Zhang had proposed the formation of a “special purpose entity” through which the group planned to repurchase shares and notes of the company. This has also raised concerns about its balance sheet and cash flow performance.
Stocks to Consider
Here are a few stocks that, as per our model, have the right combination of the two key components, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold),to post an earnings beat this quarter:
General Dynamics Corp. (GD - Free Report) has an earnings ESP of +2.17% and a Zacks Rank #2.
CBS Corp has an earnings ESP of +1.16% and a Zacks Rank #2.
Spectra Energy Corp. (SE - Free Report) has an earnings ESP of +16.00% and a Zacks Rank #2.
SOHU.COM INC Price
SOHU.COM INC Price | SOHU.COM INC Quote
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