NQ Mobile Q4 Earnings Preview: Will The Company Beat Revenue Estimates For The Twelfth Straight Time?

| About: NQ Mobile (NQ)

Summary

NQ Mobile has beaten revenue estimates for the last eleven quarters.

With all the drama that unfolded during the latest quarter, will the Company be able to beat expectations again?

Chinese companies across the board crushed analyst expectations. Is this a telling sign for NQ Mobile?

Do not be surprised to see NQ Mobile release something else alongside its fourth-quarter earnings and full-year results.

NQ Mobile Inc. (NYSE:NQ), a leading global provider of mobile internet services, will report fourth-quarter and full-year earning results on April 10, 2014, after the close of the U.S. markets.

Following the results, NQ Mobile's management team will hold an earnings conference call to discuss the Company's results and outlook at 8:00 p.m. U.S. Eastern Standard Time on Thursday, April 10, 2014, (8:00 a.m. Beijing/Hong Kong Time on Friday, April 11, 2014).

Investors who want to listen in on the live or archived webcast can go to the Investor Relations section of NQ Mobile's website at ir.nq.com or click here.

After beating analyst expectations on both the top and bottom lines the last five quarters, will NQ Mobile be able to beat expectations once again? Let's take a look at the numbers that Wall Street expects.

Wall Street Expects:

  • Revenue: $62.8M
  • EPS: 0.32
  • 2014 Q1 Guidance: $65.5M

So how has the company performed with its earning reports? The table below shows NQ's top line numbers over the past five quarters.

Revenue History November 2012 Q3 March 2013 Q4 May 2013 Q1 August 2013 Q2 November 2013 Q3
Revenue Estimates: $24.5M $29.1M $32.9M $39.3M 50.9M
Actual Revenue: $25.8M $30.0M $33.2M $41.4M 54.2M
Difference: +$1.3M +$900K +$300K +$2.1M +3.3M
Average: +1.58M
Click to enlarge

As you can see, NQ Mobile has consecutively beaten the top line and the gap is widening with each report. Of course this doesn't mean the Company will automatically beat expectations for the upcoming quarter, but it does show that management delivers and that history is on the side of the longs.

Not only that, but NQ Mobile hasn't missed on the top line since going public back in 2011. With another beat, NQ Mobile can extend that streak to twelve.

Earning Trends

The earnings season is coming to a close with another one just around the corner. So what have we learned from the earnings season so far? Looking specifically at Chinese companies, one can see that many of them have posted record-breaking results, crushing analyst expectations in the process.

While NQ Mobile is becoming more of a diversified and global company, they still generate a lot of revenue from China. Seeing how other Chinese companies have fared, gives investors a nice peak of what they can expect from this mobile services provider. The table below gives you an idea of how some of the top Chinese companies have fared recently.

BIDU VIPS SINA RENN DANG YOKU
Revenue Estimates $1.53B $559.4M $191.1M $30.1M $315.8M $145.9M
Revenue Results $1.57B $651M $197M $30.7M $325.7M $148.9M
EPS Estimates $1.37 $0.41 $0.46 $-0.04 $-0.07 $-0.05
EPS Results $1.39 $0.49 $0.47 $0.27 $0.04 $-0.02
Click to enlarge

While this is not the entire list of Chinese companies that reported earnings, the table provides you with a good idea of what has taken place.

These results tell me that the economy in China is not as dire as some prognosticators say it is. Think about this for a moment... China's economy is growing at a rate of almost 8%. The U.S economy is barely maintaining growth just over 2% and with corporations reporting better-than-expected numbers, investors in NQ Mobile should feel confident heading into earnings.

Audit + Earnings Results?

There has been a lot of talk lately among investors about when the audit report will come out. Some believe we are days away from the report, while others believe we still have a ways to go. There has also been rumors that the audit will be released when the Company reports earnings on Thursday, which is why the earnings report was bumped from March to April.

With so much speculation going on, it's no wonder why shares of NQ Mobile have been so volatile lately. One thing is certain; nobody (even NQ Mobile itself) knows when the audit report will be finished and available for release. I don't want to add to the speculation, but I would like to point out something that I find interesting.

During the last earnings report, moments before earnings were announced, NQ Mobile, announced a Senior Management Share Purchase Plan. This plan allowed management to use their own personal funds to purchase up to $3 million of the Company's shares. A couple of minutes later, the Company's earnings were released. So why did I bring this up?

Frankly to show you that anything is possible on earnings day and that investors shouldn't be surprised if NQ Mobile were to release something alongside the earnings report. Remember, we are still awaiting the results from the audit as well as the special independent investigation that NQ Mobile put together. Because of this, I believe there is a good chance that something else will be released when earnings are announced.

Conclusion

The earnings season brings with it many joys and pains, as results bring volatility and massive price swings. That is why finding which stocks will perform the best on earnings day should be key for investors. I believe NQ Mobile has a lot to give investors and here is why.

Even if NQ Mobile were to miss on earnings, shares are so undervalued that the impact would be minimal in my opinion. NQ Mobile sports a PEG of 0.40, with a forward P/E just over 11. This is also a company that is looking to grow revenues by triple digits this quarter. Clearly there is massive upside potential with this stock.

The fact that NQ Mobile has a history of delivering great results on earnings day should please investors. While past performances does not necessarily predict future results, it does give investors more of an advantage than disadvantage come earnings day.

As always, I'm providing you with my track record and other stocks that I recommend. The link provided will show you all of my picks, how they have fared, and where I think they will be going in the near future. I think you will find my track record to be very impressive and useful.

Disclaimer: Investors are always reminded that before making any investment, you should do your own proper diligence on any stock mentioned in this article. Have a great day and as always, I look forward to hearing your thoughts or questions that you might have.

Disclosure: I am long NQ. 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.