The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Changyou.com beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share expanded significantly.
Gross margins contracted, operating margins expanded, net margins dropped.
Changyou.com reported revenue of $165.8 million. The 10 analysts polled by S&P Capital IQ anticipated revenue of $155.5 million on the same basis. GAAP reported sales were 39% higher than the prior-year quarter's $119.0 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 $1.42. The three earnings estimates compiled by S&P Capital IQ predicted $1.32 per share. GAAP EPS of $1365.58 for Q3 were much 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 81.3%, 350 basis points worse than the prior-year quarter. Operating margin was 55.7%, 370 basis points better than the prior-year quarter. Net margin was 44.0%, 40 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $160.9 million. On the bottom line, the average EPS estimate is $1.33.
Next year's average estimate for revenue is $597.6 million. The average EPS estimate is $5.17.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 182 members out of 211 rating the stock outperform, and 29 members rating it underperform. Among 36 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 27 give Changyou.com a green thumbs-up, and nine 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 $33.56.
Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not Changyou.com makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.
- Add Changyou.com to My Watchlist.