Katie Couric Interviews Reese Witherspoon

Katie Couric, left, is one of Yahoo!'s more high-profile celebrity hires. Here she talks with Reese Witherspoon. Image credit: Yahoo. 

Shares of Yahoo! (NASDAQ:YHOO) stock began the day down over 21% year to date. Will the slide continue or are better days ahead? A lot depends on how well the business performs. Here's a closer look at what analysts expect to see when the company reports second-quarter earnings this afternoon:

Q2 Estimates
Revenue
Year-Over-Year Growth
Earnings Per Share
Year-Over-Year Growth

Low estimate

 $1,009.54 million  (2.96%)  $0.14  (62.2%)

High estimate

 $1,049.78 million  0.90%  $0.24  (35.1%)

S&P CAPITAL IQ CONSENSUS

 $1,031.46 million

 (0.86%)

 $0.19

 (48.6%)

Source: S&P Capital IQ

A beat would be a welcome change. Only once in the past four quarters has Yahoo! reported more profit than Wall Street was targeting:

Earnings History
Q2 2014
Q3 2014
Q4 2014
Q1 2015

Consensus

$0.38

 $0.32

$0.30

$0.18

Actual

$0.37

 $0.52

$0.30

$0.15

DIFFERENCE

($0.01)

$0.20

$0.00

($0.03)

Source: S&P Capital IQ

Looking at the overall business, I'm watching for momentum in each of these four areas:

1. Big gains in mobile users. CEO Marissa Mayer likes to refer to Yahoo! as a "mobile-first" company. The stock won't move higher unless her team makes good on that moniker in today's report. Last quarter, Yahoo! served over 600 million monthly active mobile users, up just over 20% year over year. Investors are no doubt looking for similar or better growth in Q2.  

2. Strong uptake for mobile apps and ads. In Q1, mobile sources accounted for $234 million in revenue, according to the strictures of generally accepted accounting principles (GAAP). That was up 61% year over year, and equal to just over 22% of reported sales. Making good on the "mobile-first" mantra should mean increasing that ratio materially.

3. Improving engagement with original series. Three years ago, Yahoo Screen had a few rebroadcast properties and the Ben Stiller original series Burning Love. Today, the company has season 6 of Community, the sci-fi comedy Other Space, and the sports comedy Sin City Saints. How much are audiences engaging with the content? Is it even within spitting distance of the 90% of Netflix members who have engaged with that company's original programming? Mayer didn't say much about original series on the last earnings call, so any good news in this area could be a catalyst for the stock.

4. Clarity on the long-term potential of SpinCo business. While an N-2 filing describing the spinoff and the management of funds is now visible at the SEC's EDGAR database, the document isn't helpful in its current form. Detailed financials are still to come, as is any sense of what we might expect from Yahoo Small Business. Surprisingly good guidance for this side of the business could be a welcome catalyst.

Yahoo! reports Q2 results today after the market closes; check back here for our take on the report. And in the meantime, leave a comment to let us know what you're expecting and what you think of Yahoo! stock at current prices.

Tim Beyers has never yodeled, but he is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He also owned shares of Apple and Netflix at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool.

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