The company reported a 43% year-over-year revenue increase thanks to Weibo, its messaging service, increasing its advertising sales by 163% to $56 million. But Sina's non-GAAP revenue of $192.3 million barely edged the consensus estimate of $192.2 million, according to Thomson Reuters. Non-GAAP net income also doubled to $33 million or 47 cents a share, which also barely beat analysts' expectations of 46 cents.
Reports also surfaced Monday that Sina plans an IPO for Weibo, but this plan could fall flat, as Sina's fourth-quarter report showed Weibo relies heavily on advertising for its revenue.
"The strong performance of Weibo's advertising and value-added services in the fourth quarter allowed us to end 2013 with strong top line and bottom line growth," said Chairman and CEO Charles Chao in the company's statement. "As we enter 2014, we will continue to focus on growing Weibo's user base and user engagement through product innovation, as well as seizing opportunities to enable us for long-term growth."
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TheStreet Ratings team rates SINA CORP as a "hold" with a ratings score of C. TheStreet Ratings 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 31.10% 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.
- You can view the full analysis from the report here: SINA Ratings Report