Growth Of Weibo Expected To Fuel Sina Earnings

May.20.14 | About: Sina Corporation (SINA)

Summary

This quarter Wall Street expects earnings to come in 2 cents higher per share than last year.

Revenue is expected to come in around $171 million with much of the growth coming from the increased monetization of Weibo.

Sina has been plummeting since its early January highs and has now fallen 47% this year.

Sina Corp. (NASDAQ:SINA) is set to report FQ1 2014 earnings after the market closes on Wednesday, May 21st. Sina is a Chinese online media company, which operates Sina.net and micro blogging website Sina Weibo (NASDAQ:WB) which is similar to Twitter. Sina stock has been plummeting since early January highs and has now fallen 47% this year. According to a pre-announcement from the company revenue is expected to come in around $171 million with much of the growth coming from the increased monetization of Weibo. This quarter Wall Street expects earnings to come in 2 cents higher per share than last year and for revenue to grow year over year by 35%. Here's what investors expect from Sina on Wednesday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

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(Click here to see Estimates and Interactive Features for Sina)

The current Wall Street consensus expectation is for Sina to report 4 cents EPS and $169.59M revenue while the current Estimize.com consensus from 16 Buy Side and Independent contributing analysts is 8 cents EPS and $169.6M in revenue. This quarter the buy side as represented by the Estimize.com community is expecting Sina to report in-line with Wall Street's revenue consensus but exceed earnings expectations by 4 cents per share.

Over the previous six quarters, the consensus from Estimize.com has been more accurate than Wall Street in forecasting Sina's EPS and revenue five times and twice, respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non-professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a larger than usual differential in earnings expectations but no difference in revenue projections.

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The distribution of earnings estimates published by analysts on the Estimize.com platform range from 5 cents to 22 cents per share and from $160.00M to $171.50M in revenues. This quarter we're seeing a wide range of estimates on Sina.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signals less agreement in the market, which could mean greater volatility post earnings.

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Throughout the quarter the Wall Street EPS consensus fell from 25 cents to 4 cents while the Estimize consensus dropped from 14 cents to 8 cents. Meanwhile Wall Street revenue consensus remained flat at $169.59M while the Estimize consensus rose from $167.23M to $169.6M. Timeliness is correlated with accuracy and the directionality of analyst estimate revisions going into an earnings report are often a leading indicator.

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The analyst with the highest estimate confidence rating this quarter is turbinecity who projects 6 cents EPS and $170.19M in revenue. turbinecity was our Winter 2014 season winner and is ranked second overall among more than 4,450 contributing analysts. This season turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 60% and 51% of the time, respectively, throughout a massive 1,073 estimates.

Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case turbinecity expects Sina to beat the Estimize revenue consensus but come up short against the community's EPS forecast.

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While all eyes on Chinese web businesses are focused on the upcoming Alibaba (ABABA) IPO, the growth of Weibo has fueled earnings growth for Sina while the company's stock has been getting crushed. This quarter Sina's earnings per share will need to come in at 8 cents, double Wall Street's projection of 4 cents just to satisfy the expectations of the Estimize community. For now Sina remains another online company with a high price to earnings ratio of 73, and the market has not been kind to those companies lately.

Disclosure: None.