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Sina (SINA) Down 11.7% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Sina Corporation . Shares have lost about 11.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as 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.

SINA Corp. Beats on Earnings and Revenues in Q1

SINA Corp reported first-quarter 2017 adjusted earnings (including stock based compensation) of $0.22 per share, which was much better than the Zacks Consensus Estimate of a loss of $0.28.

Non-GAAP earnings (excluding stock based compensation) of $0.52 per share surged a massive 139.3% from the year-ago quarter.

Adjusted net revenue of $275.4 million beat the Zacks Consensus Estimate of $263 million and increased 40.5% year over year.

Quarter Details

Advertising revenues moved up 40% (48% on a constant currency basis) year over year to $228 million, driven by the momentum of the Weibo segment. Non-advertising revenues increased 40% year over year to $50.1 million.

Revenues from the Weibo business surged 71% year over year to $212.7 million. Monthly active users increased 30% year over year to $340 million, driven by the increasing number of mobile users. At the end of the quarter, daily active users went up to 154 million, increasing 28% from the year-ago quarter.

Weibo non-ad revenues grew 49% to $29.9 million, mainly attributable to an increase in membership revenues. Weibo's ad revenues grew 71% to 169.3 million in the reported quarter.

Portal Advertising revenues decreased 6% (1% on a constant currency basis) year over year to $59.8 million. Portal non-advertising revenues increased 34% to 17.6 million resulting from the progress made in online finance business.

SINA’s online payment business — SINA Pay — reported strong figures, with revenues reaching almost $10 million.

Operating income (including stock-based compensation) was $42.5 million against the year-ago quarter’s loss of $10.6 million.

Operating income (excluding stock-based compensation) was $63.7 million, a massive increase from $5.6 million reported in the year-ago quarter.

Balance Sheet and Cash Flow

SINA exited the quarter with cash & cash equivalents (including short-term investments & restricted cash) of $1.8 billion compared with $1.4 billion as of Dec 31, 2016.

Cash provided by operating activities in the quarter was $93 million. Capital expenditure was $5.3 million compared with $21.5 million in the previous quarter.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. In the past month, the consensus estimate has shifted upward by 458.33 % due to these changes.

Sina Corporation Price and Consensus

 

VGM Scores

At this time, the stock has a nice Growth Score of 'B', however its Momentum is doing a bit better with an 'A'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for growth and to a lesser degree value.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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