Changyou.com Limited Outruns Estimates Again

Seth Jayson, The Motley Fool
Updated

Changyou.com (NAS: CYOU) reported earnings on Feb. 6. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Changyou.com beat expectations on revenues and earnings per share.

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

Gross margins shrank, operating margins shrank, and net margins grew.

Revenue details
Changyou.com tallied revenue of $137.7 million. The 15 analysts polled by S&P Capital IQ expected to see net sales of $124.4 million. GAAP sales were 78% higher than the prior-year quarter's $91.7 million.

anImage
anImage

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

EPS details
Non-GAAP EPS came in at $1.14. The nine earnings estimates compiled by S&P Capital IQ anticipated $1.12 per share on the same basis. GAAP EPS of $1.62 for Q4 were 80% higher than the prior-year quarter's $0.90 per share.

anImage
anImage

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 85.4%, 490 basis points worse than the prior-year quarter. Operating margin was 62.1%, 160 basis points worse than the prior-year quarter. Net margin was 52.4%, 30 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $132.1 million. On the bottom line, the average EPS estimate is $1.10.

Next year's average estimate for revenue is $564.8 million. The average EPS estimate is $4.55.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 177 members out of 192 rating the stock outperform, and 15 members rating it underperform. Among 41 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 36 give Changyou.com a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Changyou.com is outperform, with an average price target of $42.31.

Over the decades, small-cap stocks like Changyou.com have produced market-beating returns, provided they're value-priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: 2 Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

At the time thisarticle 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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement