NEW YORK (TheStreet) -- Shares of Yahoo! Inc (YHOO) are getting a boost, up 1.21% to $46.90 this morning, after ecommerce giant Alibaba Group Holding Ltd. (BABA) reported better than expected revenue and in-line earnings in its fiscal second quarter this morning.
Yahoo! has a 384 million share stake in Alibaba, or about 15.3%, which has a current pre-tax value of $40.2 billion.
The Chinese online retailer Alibaba posted a fiscal second quarter revenue jump of 53.7% to $2.75 billion from one year ago, topping the $2.61 billion analysts' expected.
Alibaba reported earnings of 45 cents per share for the quarter, in-line with the consensus estimate.
Watch the video below for a closer look at Alibaba's quarterly results:
Separately, TheStreet Ratings team rates YAHOO INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate YAHOO INC (YHOO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 2183.5% when compared to the same quarter one year prior, rising from $296.66 million to $6,774.10 million.
- YHOO's revenue growth trails the industry average of 29.4%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- YHOO's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.75, which clearly demonstrates the ability to cover short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, YAHOO INC's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for YAHOO INC is currently very high, coming in at 83.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 590.00% significantly outperformed against the industry average.
- You can view the full analysis from the report here: YHOO Ratings Report