With shares of Yahoo (NASDAQ:YHOO) trading at around $21.22, is YHOO an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
CEO Marissa Mayer is known as a tyrant by some, but she has achieved results thus far. Yahoo has outperformed the S&P 500 by a wide margin over the past year, which will be covered further in the Technicals section.
Marissa Mayer is best known for having played a key role at Google Inc. (NASDAQ:GOOG). This is especially the case with search, but she also assisted in the development of Gmail, Google Maps, and Google News. That’s the good news.
The bad news is that many people who have worked under her in the past have claimed that she’s a poor manager who uses intimidation as a managerial style. This type of leadership usually works for a limited period of time before employees become drained and disgruntled. However, that doesn’t seem to have happened yet due to the excitement of future prospects for the company.
One of Yahoo’s goals is to increase the amount of time users spend on the site. Over the past three months, time-on-site has increased 7 percent. The bounce rate has also declined 11 percent. On the other hand, page views-per-user have declined 3.03 percent.
Several moves have been made to improve content, and these moves have come in the form of acquisitions. These acquisitions have included Stamped, OnTheAir, Snip.it, and Propeld — all strategic moves calculated to help boost market share lost to Google and Microsoft Corporation (NASDAQ:MSFT) over the past few years.
As far as the stock goes, Yahoo isn’t expensive. It’s only trading at 6 times earnings. Margins are good, and ROE is 29.06 percent. There is also a decent chance that Yahoo will return cash to shareholders in the near future.
This looks like a good situation so far, but let’s take a look at some important numbers prior to forming an opinion on the stock.