Russian internet technology firm Yandex (YNDX) is set to announce earnings next week. Analysts are expecting the search engine giant to report EPS of 15 cents on $190 million in revenues.
Yandex dominates the internet search space in Russia with 64% market share. The company maintains a presence in other CIS nations like Belarus and Kazakhstan, and is attempting to enter the fast-growing Turkish market.
Russia (RSX) is already trading at incredibly cheap valuations. Stocks on Moscow’s exchange are trading at only 4 times enterprise value divided by EBITDA, and 5 times when evaluating non-petroleum components. Compared to its emerging market peers trading at 6.5 times EV/EBITDA, Russia is about 40% cheaper.
Troika Dialog analyst Anna Lepetukhina feels that Yandex specifically is too cheap, claiming that the company “has excellent prospects and a fast sales-growth rate...(Yandex), right now it is undervalued.”
That certainly appears to be true when you compare Yandex to its domestic and foreign peers. Russian e-mail provider Mail.ru trades at 48 times trailing earnings, compared to Yandex at 38.7 times. Analogous Chinese firm Baidu (BIDU) trades at 45.8 times trailing earnings.
Yandex is down roughly 17% from its initial public offering in May. Given its strong fundamentals and relatively cheap price, investors looking to gain exposure to Russia’s middle class might want give it careful consideration.