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TheStreet Open House

Sina Corp (SINA) Earnings: What to Expect

NEW YORK (TheStreet) -- Shanghai-based SINA Corporation (SINA), operator of SINA.com and social media platform Weibo, is due to report fourth-quarter and full-year earnings on Monday, Feb. 24.

Management previously said it expects net revenue for its December-ended fourth quarter between $190 million and $194 million, including advertising revenue of $160 million to $162 million. Revenues will exclude the recognition of $4.7 million in deferred license revenues related to the company's equity investment in E-House/CRIC.

Analysts surveyed by Thomson Reuters anticipate quarterly net income of 46 cents a share on $191.84 million in revenue.

For the full year, consensus is for per-share earnings of $1.13 and $646.22 million in sales.

By midday on Tuesday, shares had added 5.7% to $73.98. Trading volume of 2.8 million had nearly exceeded its three-month daily average of 3.1 million.

TheStreet Ratings team rates SINA CORP as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate SINA CORP (SINA) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SINA's revenue growth has slightly outpaced the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 21.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SINA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.02, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for SINA CORP is rather high; currently it is at 63.82%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.74% trails the industry average.
  • Powered by its strong earnings growth of 164.28% and other important driving factors, this stock has surged by 32.12% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, SINA CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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