The 10-second takeaway
For the quarter ended March 31 (Q1), Changyou.com beat expectations on revenue and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share increased significantly.
Margins contracted across the board.
Changyou.com recorded revenue of $136.8 million. The 12 analysts polled by S&P Capital IQ anticipated net sales of $132.7 million on the same basis. GAAP reported sales were 41% higher than the prior-year quarter's $97.1 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.24. The six earnings estimates compiled by S&P Capital IQ forecast $1.11 per share. GAAP EPS of $2.44 for Q1 were 144% higher than the prior-year quarter's $1.00 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 84.4%, 370 basis points worse than the prior-year quarter. Operating margin was 58.4%, 400 basis points worse than the prior-year quarter. Net margin was 47.7%, 670 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $140.3 million. On the bottom line, the average EPS estimate is $1.14.
Next year's average estimate for revenue is $567.7 million. The average EPS estimate is $4.72.
The stock has a three-star rating (out of five) at Motley Fool CAPS. Among 31 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 26 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 $36.82.
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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.