By Brendan Gilmartin
Yahoo! Inc. (NASDAQ:YHOO) is slated to report 1Q 2014 earnings after the bell on Tuesday, April 15. The earnings release is expected at approximately 4:05 p.m. EST with a conference call to follow at 5:00 p.m. Despite the expected cash infusion from the widely publicized Alibaba IPO, Yahoo! shares are off about 15% from the early March highs near $40 and set at the lowest level in close to 5 months.
Outliers & Strategy
- Non-GAAP Earnings Per Share: The current Street estimate is $0.37 with a range of $0.31 to $0.48. (Source: Yahoo! Finance).
- Revenues: Analysts expect a relatively flat year over year at $1.08 bln.
- Despite the recent pullback, Yahoo! shares are trading at 26.8x earnings, 7.3x sales, and 2.6x book value - a slight premium to the five-year averages of 23.1x, 5.1x, and 2.0x, respectively.
- While the equity has come under pressure ahead of the quarterly results, the volatility in the options has picked up, with the market pricing in a 6.25% off the results, versus the average price move of 5.51%.
- Apart from the earnings and revenue figures, other variables that could impact post-market trading include display revenue, ads sold, paid clicks, and price-per click.
- 04/07: Yahoo's ramping up their TV programming efforts could profit on advertising as well as licensing but finding popular shows is the hard part, according to a post on Forbes.
- 04/04: Local News may be worth the $300 million being discussed for News Distribution Network, or NDN, which had 573 million video views in January alone, according to a post on TheMotleyFool.com.
- 04/04: Rumors are circulating that Yahoo wants to launch its own YouTube with support seen by a growing appetite for network content, according to a post by Entrepreneur.
- 03/17: Yahoo shares rose more than 4% amid reports that China-based Alibaba Group Holding was looking to list its IPO in the U.S. Yahoo, which owns a 24% stake in the China-based e-commerce company also received a positive note from Topeka Capital, according to a post on Barron's Online. The firm reportedly reiterated a Buy rating and $47 price target on Yahoo! and believes it could net $9.3 bln in immediate after-tax proceeds from the Alibaba offering, while the company is experiencing improving fundamentals and improving traffic trends.
Yahoo! shares moved up over 250% since October 2012 but ran into some resistance above $40. The stock is testing the 200-day moving average after having moved up too fast to produce any noteworthy support levels above the low $30s. (Chart courtesy of StockCharts.com)
Yahoo! has beaten estimates in each of the last four releases but the market reaction has often been indifferent. With the recent focus on a departing COO and the Alibaba IPO, earnings could come in at the high end of estimates and still see limited reaction from the stock. Above $40 and the stock runs into resistance. Below the $33.00 and $32.00 area would suggest a lack of support by the 200-day moving average and the October/November consolidation area.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.