DouYu International (DOYU - Free Report) is a live streaming video game company based in China. DOYU stock has climbed 60% in the last month, yet its price tag remains “cheap” and it’s poised to grow within the quickly-expanding international video game market.
DouYu is a live streaming firm focused on the gaming and e-sports market in China. The company’s offerings operate across both PC and mobile apps and it boasts that it “has gained coveted access to a wide variety of premium eSports content.” DOYU, which went public in July 2019, has exclusive streaming rights to roughly 30 major tournaments in China, according to its IPO filing.
Investors can loosely think of DouYu as a Chinese Twitch—Amazon (AMZN - Free Report) bought Twitch in 2014 for roughly $1 billion—because it allows people to watch video games live like they are more traditional sports. The company is backed by Chinese social media and gaming powerhouse Tencent (TCEHY - Free Report) and it competes against fellow U.S.-listed HUYA Inc. Sponsored ADR (HUYA - Free Report) within the growing market.
Back on May 26, DouYu outperformed the high-end of its Q1 fiscal 2020 sales guidance, which jumped 53%. More specifically, its live streaming sales soared 56% to account for over 90% of revenue, while its advertising and other revenues division climbed 22%.
Meanwhile, its mobile monthly average users climbed 15% to 56.6 million, with its quarterly average paying user count up over 26% to 7.6 million. Plus, the company’s margins hit a record high. And DouYu topped our adjusted earnings estimate by 45% at $0.13 vs. $0.09. This bottom-line beat helped push its average positive earnings surprise to 128% over that trailing four periods.
DOYU stock over the last month has soared 60% from just under $7 a share to $11.16 per share, as of the close of regular trading on Monday. This puts it just off the $11.50 per share all-time highs from its market debut in July 2019. The stock has also outpaced the broader gaming market since it went public, up 6% vs. its industry’s 20% average decline.
Despite outpacing its industry over the last year, DOYU currently trades at a discount against our Zacks Gaming Market, which includes Glu Mobile (GLUU - Free Report) , Activision Blizzard (ATVI - Free Report) , Electronic Arts (EA - Free Report) , and many more, at 2.4X forward 12-month sales estimates vs. 2.5X. This also marks a discount against its own highs of 2.8X.
Looking ahead, our Zacks estimates call for DouYu’s full-year fiscal 2020 revenue to climb over 29%, with FY21 expected to jump another 23% higher to hit $1.66 billion. And its adjusted FY20 EPS figure is projected to skyrocket 200% to $0.51 a share, with FY21 set to jump all the way to $0.68 per share.
DouYu’s positive longer-term earnings revisions help it earn a Zacks Rank #1 (Strong Buy) at the moment, alongside its “B” for Momentum. And clearly investors might want to consider buying DUYO as a low-priced play on the booming global video game market that is projected to expand from $159 billion in 2020 to over $200 billion by 2023.
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