Perfect World Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Perfect World (NASDAQ: PWRD  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

The Chinese online-gaming industry has suffered its ups and downs lately, but Perfect World has been particularly hurt by strong competition and other headwinds. Let's take an early look at what's been happening with Perfect World over the past quarter, and what we're likely to see in its quarterly report on Monday.

Stats on Perfect World

 

 

Analyst EPS Estimate

$0.39

Change From Year-Ago EPS

(57%)

Revenue Estimate

$106 million

Change From Year-Ago Revenue

(11%)

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will Perfect World give investors a winning score this quarter?
Analysts have had mixed views on Perfect World over the past few months, having boosted their views slightly on earnings for the just-ended quarter, but pulling back on the full-year 2013 consensus. The stock, though, has performed reasonably well, rising 7% since early December.

Perfect World is one of many companies in China offering massively multi-player online role-playing games to gamers around the world. Although the Chinese online gaming industry is still growing at a strong rate, Perfect World hasn't participated nearly as much as its peers. Larger players NetEase (NASDAQ: NTES  ) and ChangYou (NASDAQ: CYOU  ) have managed to grow their revenue at a fairly substantial rate, but Perfect World has seen revenue drop in the past year, and expects an even bigger contraction this quarter.

In an attempt to boost traffic and promote a coming release, Perfect World gave users early access to its Neverwinter Dungeons & Dragons MMORPG. With one weekend in February and two weekends in March, select gamers in Europe and North America will be able to look at the game for 60 hours, with buyers of the game getting guaranteed slots. The company also has a number of games under development that should launch later this year.

In its quarterly report, watch closely to see how Perfect World fares outside its core Chinese market, where the company has seen solid growth recently. If the company can keep attracting international gamers, then they may prove to be the key to reawakening Perfect World's overall revenue growth.

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