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Sohu.com (SOHU) Up 26.9% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Sohu.com Inc. (SOHU - Free Report) . Shares have added about 26.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sohu's Q1 Loss Wider, Revenues Decline Y/Y
Sohu.com reported first-quarter 2017 non GAAP loss of $1.75 per share, much wider than year-ago quarter’s loss of $0.56.
However, Sohu’s revenues of $374.1 million beat the Zacks Consensus Estimate of $366.7 million. On a year-over-year basis, revenues decreased 8.3% due to lower revenues from advertising and online gaming. RMB depreciation had a big impact on results, adds management.
Quarterly Details
Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) fell 14% to $223 million.
Brand advertising revenues in the reported quarter fell 35% to $81 million on a year-over-year basis due to declining advertising revenues from video and real estate businesses. Search and search-related revenues increased 6% to $142 million due to growth in search traffic.
Online game revenues for the quarter plunged 17% year over year to $85 million due to declining revenues from older game titles.
Sogou’s revenues grew 10% to $162 million driven by increase in mobile and search traffic.
Margins
Non-GAAP gross margin in the quarter decreased to 42% from 53% in the year-ago quarter. Non-GAAP gross margin of the company’s online advertising business was 27%, down from 43% in the prior-year quarter.
Brand advertising business margin was 2%, reflecting a sharp drop from 32% reported in the year-ago quarter primarily due to higher video content costs. Non-GAAP gross margin for the search and search-related business in the quarter was 42%, down from 54% in the year-ago quarter.
Non-GAAP gross margin of the company’s online game business was 81% against 75% reported in the prior-year quarter.
Sohu’s non GAAP operating loss was $40 million against profit of $15 million reported in the year-ago quarter.
GAAP loss per share was $1.77 as against $0.53 reported year over year.
Balance Sheet
Sohu exited the quarter with cash and cash equivalents (and short-term investments) of $1.25 billion compared with $1.30 million as of Dec 31, 2016.
Outlook
For the second quarter of 2017, Sohu expects revenues in a range of $390–$420 million.
Management estimates brand advertising revenues in a range of $85 million to $95 million, representing 16% to 25% year-over-year decline.
Sogou revenues are expected in the range of $190 million to $200 million, representing 8% to 14% year-over-year decline. Online game revenues are expected in the band of $75–$85 million, hinting at a year-over-year decline of 14% to 24%.
The company expects non-GAAP loss per share between $1.80 and $2.05.
How Have Estimates Been Moving Since Then?
It turns out that fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower. In the past month, the consensus estimate has declined 54.7% due to these changes.
At this time, Sohu.com's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value investors based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an in-line return from the stock in the next few months.
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Sohu.com (SOHU) Up 26.9% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Sohu.com Inc. (SOHU - Free Report) . Shares have added about 26.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sohu's Q1 Loss Wider, Revenues Decline Y/Y
Sohu.com reported first-quarter 2017 non GAAP loss of $1.75 per share, much wider than year-ago quarter’s loss of $0.56.
However, Sohu’s revenues of $374.1 million beat the Zacks Consensus Estimate of $366.7 million. On a year-over-year basis, revenues decreased 8.3% due to lower revenues from advertising and online gaming. RMB depreciation had a big impact on results, adds management.
Quarterly Details
Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) fell 14% to $223 million.
Brand advertising revenues in the reported quarter fell 35% to $81 million on a year-over-year basis due to declining advertising revenues from video and real estate businesses. Search and search-related revenues increased 6% to $142 million due to growth in search traffic.
Online game revenues for the quarter plunged 17% year over year to $85 million due to declining revenues from older game titles.
Sogou’s revenues grew 10% to $162 million driven by increase in mobile and search traffic.
Margins
Non-GAAP gross margin in the quarter decreased to 42% from 53% in the year-ago quarter. Non-GAAP gross margin of the company’s online advertising business was 27%, down from 43% in the prior-year quarter.
Brand advertising business margin was 2%, reflecting a sharp drop from 32% reported in the year-ago quarter primarily due to higher video content costs. Non-GAAP gross margin for the search and search-related business in the quarter was 42%, down from 54% in the year-ago quarter.
Non-GAAP gross margin of the company’s online game business was 81% against 75% reported in the prior-year quarter.
Sohu’s non GAAP operating loss was $40 million against profit of $15 million reported in the year-ago quarter.
GAAP loss per share was $1.77 as against $0.53 reported year over year.
Balance Sheet
Sohu exited the quarter with cash and cash equivalents (and short-term investments) of $1.25 billion compared with $1.30 million as of Dec 31, 2016.
Outlook
For the second quarter of 2017, Sohu expects revenues in a range of $390–$420 million.
Management estimates brand advertising revenues in a range of $85 million to $95 million, representing 16% to 25% year-over-year decline.
Sogou revenues are expected in the range of $190 million to $200 million, representing 8% to 14% year-over-year decline. Online game revenues are expected in the band of $75–$85 million, hinting at a year-over-year decline of 14% to 24%.
The company expects non-GAAP loss per share between $1.80 and $2.05.
How Have Estimates Been Moving Since Then?
It turns out that fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower. In the past month, the consensus estimate has declined 54.7% due to these changes.
Sohu.com Inc. Price and Consensus
Sohu.com Inc. Price and Consensus | Sohu.com Inc. Quote
VGM Scores
At this time, Sohu.com's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value investors based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an in-line return from the stock in the next few months.