The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Changyou.com beat expectations on revenues and earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share grew significantly.
Gross margins shrank, operating margins shrank, and net margins grew.
Changyou.com tallied revenue of $137.7 million. The 15 analysts polled by S&P Capital IQ expected to see net sales of $124.4 million. GAAP sales were 78% higher than the prior-year quarter's $91.7 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
Non-GAAP EPS came in at $1.14. The nine earnings estimates compiled by S&P Capital IQ anticipated $1.12 per share on the same basis. GAAP EPS of $1.62 for Q4 were 80% higher than the prior-year quarter's $0.90 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 85.4%, 490 basis points worse than the prior-year quarter. Operating margin was 62.1%, 160 basis points worse than the prior-year quarter. Net margin was 52.4%, 30 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $132.1 million. On the bottom line, the average EPS estimate is $1.10.
Next year's average estimate for revenue is $564.8 million. The average EPS estimate is $4.55.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 177 members out of 192 rating the stock outperform, and 15 members rating it underperform. Among 41 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 36 give Changyou.com a green thumbs-up, and five give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Changyou.com is outperform, with an average price target of $42.31.
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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. 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.