On Dec 2, Soufun Holdings Ltd. (SFUN - Free Report) touched a 52-week high of $72.65 following the company’s announcement that its SouFun Financial Services Channel will be active from Dec 16, 2013.
This financial services platform of SouFun will bring the financial products and services of third party to SouFun’s different members, clients and agents. This new initiative to provide financial services will consolidate SouFun’s client base and will also enhance its network effect across existing e-commerce, marketing and listing services.
With respect to earnings performance, SouFun delivered positive earnings surprises in three of the last four quarters with an average beat of 34.9%. In the last reported quarter, SouFun posted impressive results delivering a positive earnings surprise of 31.4%. Results were 66% ahead of the year-ago earnings. The better-than-expected results were primarily driven by a sturdy top line that improved 45% year over year.
On the back of solid progress, the company raised its top-line expectation for 2013. It now expects to generate revenues in the range of $605-$615 million, up from $538–$548 million guided earlier. The new guidance represents a year-over-year improvement of 40.6% to 42.9%.
These positives led the company to witness rising estimates. The Zacks Consensus Estimate moved north by 3.6% to $2.87 per share over the last 60 days, as most of the estimates were revised upward. For 2014, the Zacks Consensus Estimate inched up 1.2% to $3.47 per share over the same time period.
SouFun intends to remain focused to explore new lines of business. We expect this endeavor to enhance its operational performance besides helping it to achieve long-term objectives and enhance shareholder value. The long-term expected earnings growth for the company is 36.5%.
Valuation for SouFun looks attractive. Although the shares are trading at a premium to the peer group average on a price-to-book basis and also on a forward price-to-earnings basis, return on equity is significantly higher than the return of the peer group. Also, the 1-year return from the stock came in at 233.4%, much ahead of the S&P’s return of 27.2%.
SouFun presently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the business services industry include Competitive Technologies Inc. , Core-Mark Holding Company Inc. (CORE - Free Report) and Furmanite Corp. . All these stocks carry the same Zacks Rank as SouFun.