If watching Momo (NASDAQ:MOMO) race higher through the first half of the year is triggering some flashes of deja vu, you're not alone. The Chinese social video specialist is racing higher in 2018 after delivering three consecutive blowout quarters. Last week's strong financial report sent the shares 15% higher, bringing its year-to-date return in 2018 up to a hearty 79%.

We've been here before. Momo became a growth investor darling a year ago -- soaring 139% through the first half of the year -- only to give a good chunk of those gains back by plunging 44% through the final six months of 2017. Momo is treating investors to another strong start in 2018, but those buying into the Chinese dot-com better hope that we don't see a repeat performance.

Reception desk at Momo headquarters.

Image source: Momo.

Sticking the landing

Momo's second quarter was another market topper. Revenue rose 58% for the period, comfortably ahead of the 51% to 55% top-line growth that it was targeting three months earlier. Making the most of its scalable platform, the bottom line grew even faster. Momo's adjusted earnings soared 90% to hit $0.66 a share. Momo doesn't offer earnings guidance, but once again, we find Wall Street underestimating the profit power here. 

Quarter EPS (Estimate) EPS (Actual) Surprise
Q1 2017 $0.32 $0.44 38%
Q2 2017 $0.31 $0.35 13%
Q3 2017 $0.38 $0.45 18%
Q4 2017 $0.46 $0.53 15%
Q1 2018 $0.50 $0.69 38%
Q2 2018 $0.61 $0.66 8%

Data source: Yahoo! Finance.

Momo has consistently landed ahead of analyst expectations, and if anything, last week's 8% beat is modest by recent historical standards. This is the first time since 2016 that Momo won't exceed Wall Street targets by a double-digit percentage. 

The second quarter last year was also Momo's weakest beat. It will be interesting to see if the gap between the analyst community and Momo's actual adjusted net income widens again in the third and fourth quarters. The sobering side note here is that surpassing bottom-line expectations couldn't save the stock from cratering during the latter half of 2017. 

Decelerating revenue growth is what scared away the bulls during the final half of last year. Year-over-year top-line gains slowed for four consecutive quarters before accelerating in the first quarter of this year. Deceleration photobombed the second quarter, but the 58% in revenue growth for the period is actually better than its increase during the fourth quarter of last year.

The end result of up-and-down-and-up half-years is still pretty spectacular. Momo shares have risen 139% since the start of last year, so we're essentially back to where we were at the end of June last year -- but we can't call this a lost year for investors. Profitability continues to blossom, making the stock's valuation that much more compelling than it was the last time it was at these levels. 

Momo is trading at a reasonable 17 times this year's projected earnings and less than 14 times next year's multiple. Momo is growing a lot faster than those multiples, and we already know about its healthy track record when it comes to beating Wall Street's conservative projections. Chinese growth stocks have generally fallen out of favor this summer, but Momo is earning its recent gains. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.