Perfect World Misses Where it Counts

Perfect World (Nasdaq: PWRD  ) reported earnings on Nov. 19. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Perfect World beat expectations on revenues and missed estimates on earnings per share.

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

Margins shrank across the board.

Revenue details
Perfect World logged revenue of $110.7 million. The eight analysts polled by S&P Capital IQ predicted sales of $104.2 million on the same basis. GAAP reported sales were 0.4% lower than the prior-year quarter's $111.1 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 $0.34. The three earnings estimates compiled by S&P Capital IQ predicted $0.46 per share. GAAP EPS of $0.06 for Q3 were 33% lower than the prior-year quarter's $0.09 per share.

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 81.5%, 140 basis points worse than the prior-year quarter. Operating margin was 15.7%, 1,160 basis points worse than the prior-year quarter. Net margin was 12.4%, 790 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $110.9 million. On the bottom line, the average EPS estimate is $0.45.

Next year's average estimate for revenue is $444.9 million. The average EPS estimate is $2.03.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 486 members out of 520 rating the stock outperform, and 34 members rating it underperform. Among 97 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 87 give Perfect World a green thumbs-up, and 10 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 $15.17.

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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. Motley Fool newsletter services recommend Perfect World. 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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