Why Sohu.com (SOHU) Stock Is Down This Morning

NEW YORK (TheStreet) -- Shares of Sohu.com Inc. (SOHU) are down -5.69% to $54.70 in pre-market trade after the Chinese Internet company reported unaudited 2014 first quarter earnings results.

Total revenues were US$365 million, up 19% year-over-year and down 5% quarter-over-quarter.

Brand advertising revenues were US$111 million, up 38% year-over-year and down 10% quarter-over-quarter.

Sogou revenues were US$70 million, up 78% year-over-year and flat quarter-over-quarter.Online game revenues were US$163 million, down 2% year-over-year and 5% quarter-over-quarter.

GAAP net loss attributable to Sohu.com Inc. was US$79 million, or US$2.05 loss per fully-diluted share.

Non-GAAP net loss attributable to Sohu.com Inc. was US$48 million, or US$1.26 loss per fully-diluted share.

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TheStreet Ratings team rates SOHU.COM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOHU.COM INC (SOHU) 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

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

  • The revenue growth came in higher than the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 28.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that SOHU's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.77 is high and demonstrates strong liquidity.
  • 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 88.8% when compared to the same quarter one year ago, falling from $25.39 million to $2.83 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, SOHU.COM INC'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: SOHU Ratings Report

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