UPDATE AOL Inc. Earnings: Investors CHEER Stock as Profitable Turnaround Evident

AOL Inc. (NYSE:AOL) climbed to a profit in the second quarter and beat Wall Street’s expectations in the process. AOL is a global web services company whose business consists of online content, products, and services that it offers to consumers, publishers, and advertisers.

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AOL Inc. Earnings Cheat Sheet

Results: Reported a profit of $970.8 million ($10.17 per diluted share) in the quarter. AOL Inc. had a net loss of $11.8 million or a loss 11 cents per share in the year-earlier quarter.

Revenue: Fell 2% to $531.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: AOL Inc. beat the mean analyst estimate of 10 cents per share. It beat the average revenue estimate of $518.7 million.

Quoting Management: “Today’s results represent a significant milestone for AOL as we returned to Adjusted OIBDA growth for the first time in four years,” said Tim Armstrong, Chairman and CEO. “The strong results and consumer performance we announced today are clear signs our strategic and operating efforts are translating into significant financial progress.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 0.2 percentage point from the year-earlier quarter to 25.4%. In that span, margins have contracted an average of eight percentage points per quarter on a year-over-year basis.

For three consecutive quarters, the company has topped analyst estimates. It beat the mark by 11 cents in the first quarter and by 18 cents in the fourth quarter of the last fiscal year.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the third quarter has risen to 14 cents per share from 9 cents. Over the past three months, the average estimate for the fiscal year has climbed from 49 cents per to share to 75 cents.

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

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