Never underestimate the drive of a pioneer. Shanda
Last night's first-quarter report was encouraging. Revenues soared 56% higher to $68.8 million. Reported earnings were a stunning $0.80 per ADS, though once you adjust that for the company's sale of the 2.1 million shares of SINA
Either way, the company clocked in well ahead of the $0.29 per ADS profit on $65.7 million in revenue that analysts had been expecting.
With online gaming accounting for 95% of its revenue -- even more than rival NetEase's
Let's put it all together. Shanda beat estimates a day after NetEase and The9
The market isn't convinced. Shanda is trading at just 20 times next year's Wall Street estimate, and NetEase and The9 are fetching even lower multiples. It has become a value investing niche in China. And as a bonus, they're actually growth stocks.
NetEase and Shanda are Motley Fool Rule Breakers recommendations. A free 30-day subscription offer is available if you want to kick those tires.
Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin gaming stocks for a long time. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.