Stock To Watch: Qihoo 360 Technology (QIHU) In Perilous Reversal

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.

Trade-Ideas LLC identified Qihoo 360 Technology ( QIHU) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Qihoo 360 Technology as such a stock due to the following factors:

  • QIHU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $184.5 million.
  • QIHU has traded 5.5 million shares today.
  • QIHU is down 3.2% today.
  • QIHU was up 14.4% yesterday.

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More details on QIHU:

Qihoo 360 Technology Co. Ltd., through its subsidiaries, provides Internet services in the People's Republic of China. The company operates through Internet Services and Others segments. QIHU has a PE ratio of 47. Currently there are 5 analysts that rate Qihoo 360 Technology a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Qihoo 360 Technology has been 2.9 million shares per day over the past 30 days. Qihoo 360 Technology has a market cap of $7.1 billion and is part of the technology sector and computer software & services industry. Shares are up 9.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Qihoo 360 Technology as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, growth in earnings per share, increase in net income and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 45.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • QIHOO 360 TECHNOLGY CO -ADR has improved earnings per share by 7.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, QIHOO 360 TECHNOLGY CO -ADR increased its bottom line by earning $1.71 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($3.55 versus $1.71).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 8.0% when compared to the same quarter one year prior, going from $49.12 million to $53.03 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, QIHOO 360 TECHNOLGY CO -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for QIHOO 360 TECHNOLGY CO -ADR is currently very high, coming in at 86.46%. Regardless of QIHU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.79% trails the industry average.

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