Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Chinese Internet portal Sohu.com (NAS: SOHU) surged 16% on Monday after its quarterly results topped Wall Street expectations.
So what: Sohu shares have been crushed in recent months on concerns over slowing growth, but a second-quarter beat -- adjusted EPS of $0.42 on revenue of $256 million versus the consensus of $0.39 and $248.1 million -- eases some of those fears. In fact, Sohu's online gaming unit Changyou.com (NAS: CYOU) also surged today on better-than-expected revenue, reinforcing optimism over a prolonged turnaround.
Now what: For the third quarter, management now sees adjusted EPS of $0.50-$0.55 on revenue of $272 million-$277 million, versus the consensus of $0.60 and $273.7 million, respectively. "The year 2012 is a critical year of transition for the Sohu Group," Co-President and COO Belinda Wang said in a statement. "As we continue to make heavy but necessary investments across our strategically important business lines, we are confident to see a payoff in 2013." With Sohu still off more than 50% from its 52-week highs and trading at a forward P/E of 11, betting on that bullishness might not be a bad idea.
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The article Why Sohu Shares Soared originally appeared on Fool.com.
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