Yahoo! Inc Retains Buy Recommendation

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Yahoo (Nasdaq: YHOO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B-. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, YHOO's share price has jumped by 95.24%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, YHOO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for YAHOO INC is currently very high, coming in at 83.56%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.04% is above that of the industry average.
  • YHOO, with its decline in revenue, underperformed when compared the industry average of 9.2%. Since the same quarter one year prior, revenues slightly dropped by 5.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • YAHOO INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, YAHOO INC increased its bottom line by earning $3.28 versus $0.82 in the prior year. For the next year, the market is expecting a contraction of 55.3% in earnings ($1.47 versus $3.28).

Yahoo! Inc., a technology company, provides search, content, and communication tools on the Web and on mobile devices worldwide. Yahoo has a market cap of $37.5 billion and is part of the technology sector and internet industry. The company has a P/E ratio of 31.00, above the S&P 500 P/E ratio of 18.00. Shares are up 86% year to date as of the close of trading on Monday.

You can view the full Yahoo Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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