Shanda Games Misses Where It Counts

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Shanda Games Limited (NAS: GAME) reported earnings on Feb. 22. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Shanda Games Limited met expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share dropped significantly.

Gross margins expanded, operating margins improved, net margins dropped.

Revenue details
Shanda Games Limited reported revenue of $215.3 million. The 12 analysts polled by S&P Capital IQ foresaw revenue of $214.2 million on the same basis. GAAP reported sales were 23% higher than the prior-year quarter's $174.8 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.17. The eight earnings estimates compiled by S&P Capital IQ anticipated $0.18 per share. GAAP EPS of $0.17 for Q4 were 15% lower than the prior-year quarter's $0.20 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 61.5%, 70 basis points better than the prior-year quarter. Operating margin was 29.6%, 140 basis points better than the prior-year quarter. Net margin was 22.4%, 940 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $218.7 million. On the bottom line, the average EPS estimate is $0.19.

Next year's average estimate for revenue is $913.9 million. The average EPS estimate is $0.80.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 323 members out of 332 rating the stock outperform, and nine members rating it underperform. Among 63 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 59 give Shanda Games Limited a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Shanda Games Limited is outperform, with an average price target of $6.21.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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