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What’s in the Cards for Sohu.Com (SOHU) in Q1 Earnings?

Zacks

Sohu.Com Inc. SOHU is expected to report first-quarter 2017 results on Apr 24, 2017. Last quarter, the company delivered a positive earnings surprise of 28.75%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Sohu.com's performance continues to be marred by lower revenues from advertising and online gaming. Stricter regulations, sluggish Chinese economy and stiffening competition continue to be overhangs.


Nonetheless, the company’s strength in search and mobile businesses is a positive. Sogou continues to gain popularity and market share through increased product quality and effective marketing campaigns. The partnership with Tencent will likely improve Sogou’s competitive position against market leader Baidu and Qihoo due to its strong mobile user base along with boosting its mobile search traffic further.

In the past year, Sohu’s shares have generated a negative return of 15.64% as against the Zacks Internet Services industry’s gain of 6.71%.

For the first quarter of 2017, Sohu expects revenues in a range of $345 million–$375 million.

Management estimates brand advertising revenues in a range of $75 million–$85 million, representing a 32%–40% year-over-year decline.

Sogou revenues are expected to be in a range of $145 million–$155 million. Online game revenues are expected in a band of $80 million–$90 million, indicating a year-over-year decline of 12%–22%.

The company expects non-GAAP loss per share to be between $1.55 and $1.80.

Sohu.com Inc. Price and EPS Surprise

Sohu.com Inc. Price and EPS Surprise | Sohu.com Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Sohu is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP: Earnings ESP for Sohu is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $1.63 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sohu’s Zacks Rank #3 increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Teradyne, Inc. TER has an Earnings ESP of +2.63% and a Zacks Rank #1.

Seagate Technology plc STX has an Earnings ESP of +3.77% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiserv, Inc. FISV has an Earnings ESP of +0.85% and a Zacks Rank #2.

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