Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and E-House (China) Holdings is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
E-House is right in the middle of the red-hot Chinese real-estate market. But with the government taking steps to try to prevent a full-scale bubble, how will the company respond? Let's take an early look at what's been happening with E-House over the past quarter and what we're likely to see in its quarterly report on Tuesday.
Stats on E-House
Analyst EPS Estimate
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Will E-House put a roof over investors' heads this quarter?
Analysts have had mixed views on E-House lately, having added a penny per share to their estimates for the just-completed quarter but cutting their full-year call for 2013 by $0.06 per share. But investors haven't felt any doubt about the stock, as the shares have risen by more than 50% since early December.
E-House acts as a real-estate brokerage and services company in China, acting not just to help buyers find properties but also dealing with technicalities like drafting purchase agreements and obtaining proof of valid title. Moreover, it works in real-estate advertising and promotion.
Lately, the company has seen some pretty big stock-price moves. Back in December, the company said it would sell more than $60 million in shares to its executives, using the proceeds to repurchase shares on the open market. The net effect is for insiders to have a bigger stake in the company, indicating executives' confidence that E-House is a promising investment, and shares rose in response. Yet the pricing of those shares caused a subsequent pullback the following week.
Just last week, though, E-House got bad news from the Chinese government, which took action to try to cool off the soaring housing market by raising minimums on down payments and requiring higher loan rates for second-home purchases. China also said it would enforce a 20% capital-gains tax on property sales. In response, E-House and residential real-estate developer Xinyuan Real Estate lost ground, although E-House managed to claw back its lost ground by Friday's close. SouFun Holdings , which operates an Internet-based real-estate portal offering listing services and facilitating relationships with home furnishings and improvement companies, also dropped, even though it had announced strong results in its most recent quarter. All three companies stand to lose from a cooling market, although E-House's transaction-based revenue arguably puts it in somewhat better position than companies that actually own real-estate-related assets.
In its report, watch for how E-House plans to respond to China's recent move. If it can maintain high volume despite the new restrictions, then E-House should get stronger despite its recent bullish run.
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The article E-House Earnings: An Early Look originally appeared on Fool.com.
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