Investors weren't impressed by Sohu.com
Now let's get to the stuff that yesterday's sellers appear to be missing. After shedding nearly 45% of its value since its summertime peak, Sohu's stock is pretty darn cheap.
The Chinese dot-com pioneer is now trading for a mere 13 times this year's projected earnings, less than 11 times next year's target. Since Sohu's adjusted profitability actually beat Wall Street's estimates -- and its guidance for the current quarter is well ahead of where the pros are parked -- expect the estimates to inch higher and the multiples to inch lower.
Revenue soared 42% during the third quarter. Outside of its now-meaningless wireless business, all of Sohu's segments grew revenue by 30% or better.
Could it be that investors are tiring of Sohu as a jack-of-all-trades?
Revenue at Sogou -- Sohu's small yet fast-growing search engine -- soared 244% during the period. The much larger Baidu
Sohu's video revenue has soared 110% over the past year. It's now the second most popular video site in terms of visits and video views. Meanwhile, stand-alone Chinese video site operators Youku.com
There are obviously risks involved when it comes to Chinese Internet companies. The government is getting nervous about its self-publishing power. However, this still doesn't explain why Sohu is trading at a dramatic discount to other players.
Sohu is actually even cheaper than the multiples suggest. Back out the company's $707.4 million in debt-free cash and equivalents -- nearly a third of its market cap -- and Sohu's forward multiple drops into the single digits on enterprise value basis.
Sohu is not as fortunate as Baidu to be the top dog when it comes to lucrative paid search. It doesn't have the hot social zing that investors will find in Renren
If you want to keep an eye on China's dot-com speedsters, consider adding them to My Watchlist.
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.