Yahoo Beats Expectations But Falls Anyway

| About: Yahoo! Inc. (YHOO)

Even though Yahoo! (NASDAQ:YHOO) beat the Street's earnings expectation of 33 cents by a penny the stock is still down in trading today. I'm not sure what investors are really looking for. During the last year while the market as measured by the Value Line Index was up 32.36% Yahoo! soared 106.70%:

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Let's look at all the numbers behind the stock to see where it stands:

Fundamental factors:

  • Market Cap $35.76 billion
  • P/E 25.95
  • Revenue projected to grow .20% this year and another 2.60% next year
  • Earnings estimated to increase 25.60% this year, an additional 13.60% next year and continue to increase at an annual rate of 11.78% for the next 5 years
  • Financial Strength is B++

Investor sentiment:

  • 26 Wall Street brokerage houses had 33 analysts issue 4 strong buy, 9 buy, 19 hold and an under perform recommendation to their clients
  • Institutional investors own 77% of the company
  • Short sellers dropped their short sales from 29 million shares in July to around 25 million shares recently
  • Jim Cramer's TheStreet rates this a B- stock
  • 5,192 individual investors on Motley Fool offered a 77% vote of confidence for the stock to beat the market

Technical indicators provided by Barchart

  • 48% Barchart technical buy signals
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 11 new highs and up 11.72% in the last month
  • Relative Strength Index 56.41%
  • Barchart computes a technical support level at 32.33
  • Recently traded at 33.01 with a 50 day moving average of 30.08

Peer comparison:

Yahoo is a member of the Services- Computer Integrated Systems Design Sector and during the last year was up 106.70 while Cerner (NASDAQ:CERN) was up 54.35%, Computer Sciences (NYSE:CSC) was up 62.34% and Servicenow (NYSE:NOW) was up 50.19%:

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  • Market Cap $19.20 billion
  • Revenue predicted to be up 11.00% this year and 13.40% next year
  • Earnings to grow 18.50% this year, another 17.00% next year and annually grow by 17.20% for the next 5 years
  • Wall Street analysts issued 5 strong buy, 6 buy, 12 hold and 1 sell recommendation

Computer Sciences

  • Market Cap $7.70 billion
  • Revenue projected to decrease 8.90% this year but grow again by 1.40% next year
  • Earnings estimated to increase 68.80% this year, 12.50% next year and continue to increase at a rate pf 8.00% for the next 5 years
  • Wall Street analysts issued 1 strong buy 3 buy, 10 hold and an under perform recommendation


  • Market Cap $7.10 billion
  • Revenue to grow 67.90% this year, and 45.00% next year
  • Earnings predicted to increase 35.70% this year, an additional 266.70% next year and continue to increase by 50.00% annually for at least 5 years
  • Wall Street analysts issued 5 strong buy, 10 buy and 5 hold recommendations

My take is Yahoo! is a very strong player in the computer technology and will continue to be a market leader. I am a technical investor and feel sure that as long as Yahoo! continues to trade above its 100 day moving average it has a place in all long term investors portfolios:

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At the time of publication I o not own any of these stocks.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in YHOO, CERN, CSC, NOW over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.