Boston, MA 03/03/2014 (wallstreetpr) – Youku Tudou Inc (ADR) (NYSE:YOKU) has long been known as a loss stock, but that is just about to change completely. The latest earnings results and the management and analysts’ optimism in the stock are just some of the visible signs that a positive change has come to the Internet television stock.
The company announced that its adjusted earnings per share grew by 148 percent in the latest quarter when compared to the corresponding quarter a year ago. Moreover, the EPS was strongly above the Street estimate, coming in at $0.043 against $0.003 that the Street expected. The latest quarter EPS markets the end of the string of losses that has dominated the company’s reports since it started releasing financial results.
Revenue for the quarter was up 42 percent to $148.9 million. The revenue figure also managed to exceed Street estimates by about 1.7 percent. Though the margin was minimal, it was all okay given that it resulted in surprisingly high net income.
Explaining the strong results
Youku Tudou Inc (ADR) (NYSE:YOKU) was able to improve its earnings in the most recent quarter due to improvement in its operational performance and growth in mobile traffic. The strong results were also helped by improvement in margins. The gross margin in increased by 9.5 percent to 29.8 percent in the fourth quarter 2013.
The big reduction in expenses also helped Youku Tudou Inc (ADR) (NYSE:YOKU) to post beating results in the most recent quarter. Administrative and general expenses dropped by more than 44 percent in the recent quarter.
Looking forward
Youku Tudou Inc (ADR) (NYSE:YOKU) expects to generate revenue around $114.3 million, higher than $113.8 million Street estimate. Analysts also estimate that the company will be able to realize 38.3 percent annual sales growth rate over the next three years. Note, this growth estimate is higher than the 10.6 percent industry growth estimate over the same period.
Investor Takeaway
First, Youku Tudou Inc (ADR) (NYSE:YOKU) has just moved a milestone with the latest earnings beat that effectively plugged the strong of losses that the company has suffered. Moreover, the issued estimates are not just attractive with the potential of lifting the stock price even higher, but they are also achievable by most measures. Thus, stock price growth and income improvement can be expected moving forward.
