Perfect World Whiffs on Earnings (PWRD)

Perfect World Whiffs on Earnings

Perfect World (Nasdaq: PWRD ) reported earnings on Aug. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), Perfect World met expectations on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue contracted and GAAP earnings per share shrank significantly.

Margins shrank across the board.

Revenue details
Perfect World chalked up revenue of $106.4 million. The 10 analysts polled by S&P Capital IQ foresaw revenue of $105.9 million on the same basis. GAAP reported sales were 12% lower than the prior-year quarter's $120.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.57. The three earnings estimates compiled by S&P Capital IQ forecast $0.64 per share. GAAP EPS of $0.51 for Q2 were 45% lower than the prior-year quarter's $0.93 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 81.3%, 410 basis points worse than the prior-year quarter. Operating margin was 22.9%, 1,820 basis points worse than the prior-year quarter. Net margin was 23.4%, 1,720 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $104.5 million. On the bottom line, the average EPS estimate is $0.52.

Next year's average estimate for revenue is $441.8 million. The average EPS estimate is $2.27.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 495 members out of 540 rating the stock outperform, and 45 members rating it underperform. Among 104 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 87 give Perfect World a green thumbs-up, and 17 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Perfect World is outperform, with an average price target of $16.19.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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