Renren Inc. (RENN) Earnings: What to Expect

NEW YORK (TheStreet) -- Beijing-based social networking platform Renren (RENN) is due to report its fourth quarter after the bell on Tuesday, March 18. 

For the three months to December, analysts surveyed by Thomson Reuters anticipate the firm to report a per-share loss of 4 cents and a net loss of $9.38 million.

Revenue is expected to fall 38.2% year over year to $30.15 million. 

On Wednesday, shares had surged 18.5% to $4.62. Trading volume of 10.15 million far exceeded its three-month daily average of 2.1 million. 

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TheStreet Ratings team rates RENREN INC -ADR as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate RENREN INC -ADR (RENN) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and disappointing return on equity."

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

  • RENREN INC -ADR 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, RENREN INC -ADR swung to a loss, reporting -$0.19 versus $0.11 in the prior year. For the next year, the market is expecting a contraction of 21.1% in earnings (-$0.23 versus -$0.19).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 60.0% when compared to the same quarter one year ago, falling from -$15.40 million to -$24.63 million.
  • 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, RENREN INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • RENN, with its decline in revenue, underperformed when compared the industry average of 16.5%. Since the same quarter one year prior, revenues slightly dropped by 5.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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