Changyou.com Limited Third Quarter Earnings Sneak Peek

Changyou.com Limited(ADR) (NASDAQ:CYOU) will unveil its latest earnings on Monday, November 5, 2012. Changyou.com is an online game developer and operator in China.

Changyou.com Limited(ADR) Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of $1.32 per share, a rise of 33.3% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from $1.13. Between one and three months ago, the average estimate moved up. It has been unchanged at $1.32 during the last month. For the year, analysts are projecting net income of $5.03 per share, a rise of 6.8% from last year.

Past Earnings Performance: Last quarter, the company beat estimates by 23 cents, coming in at profit of $1.34 a share versus the estimate of net income of $1.11 a share. It marked the fourth straight quarter of beating estimates.

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Wall St. Revenue Expectations: Analysts predict a rise of 30.3% in revenue from the year-earlier quarter to $155 million.

A Look Back: In the second quarter, profit rose 27.4% to $69.1 million ($1.30 a share) from $54.2 million ($1.02 a share) the year earlier, exceeding analyst expectations. Revenue rose 40.3% to $147.3 million from $105 million.

Stock Price Performance: Between October 2, 2012 and October 30, 2012, the stock price dropped $1.80 (-7%), from $25.78 to $23.98. The stock price saw one of its best stretches over the last year between January 25, 2012 and February 3, 2012, when shares rose for eight straight days, increasing 22.6% (+$5.36) over that span. It saw one of its worst periods between April 13, 2012 and April 24, 2012 when shares fell for eight straight days, dropping 11.4% (-$3.18) over that span.

Key Stats:

The company enters this earnings announcement with substantial revenue momentum. The company has averaged year-over-year revenue growth of 49.6% over the last four quarters.

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 79% in the fourth quarter of the last fiscal year and 23.5% in the first quarter before increasing again in the second quarter.

Analyst Ratings: With eight analysts rating the stock a buy, none rating it a sell and two rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.97 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company improved this liquidity measure from 2.6 in the first quarter to the last quarter driven in part by an increase in current assets. Current assets increased 18.6% to $509.7 million while liabilities rose by 4.1% to $171.9 million.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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