HUYA Q3 Earnings: Is HUYA Expensive at 58.4x Forward P/E?

in EARNINGS/INVESTING IDEAS by

HUYA Inc. is a mid-cap stock with a market capitalization of $5.530 billion and a total enterprise value of $4.219 billion. The company operates in the Communication Services sector and Entertainment industry.

HUYA Inc. (NYSE:HUYA) is scheduled to report Q3 earnings results on August 13, 2019. The company is expected to report earnings of $0.10/share on revenue of $302.3 million. The consensus earnings per share (EPS) of $0.10/share is based on a poll of 5 analysts and represents a growth of 29.3% over the same quarter last year when the company reported earnings of $0.08/share.

The revenue forecast of $302.3 million based on a poll of 8 analysts implies a year-over-year (YoY) growth of 62.6%. Last year the company reported $185.9 million in revenue for the quarter.

Expected to report EPS growth of $0.02/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $302.28 $185.86 62.6%
EPS $0.10 $0.08 29.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 5 tracked quarters, and missed expectations 1 quarters.

What are your expectations from HUYA for this earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2019 $0.08 $0.11 31.1% Beat
Q1, 2019 $0.09 $0.09 -4.4% Missed
Q4, 2018 $0.08 $0.11 39.7% Beat
Q3, 2018 $0.04 $0.08 80.7% Beat
Q2, 2018 $0.04 $0.05 10.5% Beat

After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 4.9%.

The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-13 $20.40 $21.39 4.9% Increase
2019-05-16 $21.51 $21.65 0.7% Increase
2019-03-04 $25.21 $29.96 18.8% Increase
2018-11-12 $18.98 $18.67 -1.6% Decline

Fundamentals And Technical Analysis

HUYA is currently trading at $25.35/share, up 0.4% for the day. The company is trading at approximately 84.5% of its 52-week high of $30/share. The company’s stock price is up 24.3% since the last earnings report and up 8.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 57.03 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 112.8x and a forward P/E multiple of 58.4x.

HUYA’s current share price also implies a price-to-book (P/B) multiple of 4.8x. The following table summarizes some other key fundamental ratios:

Data as of November 11, 2019
Metric Value
Last Fiscal Period FY2019.Q2
Period End Date June 30, 2019
Stock Price (Current) $25.35
P/E Ratio 112.8x
P/E Ratio (Fwd) 58.4x
PEG Ratio 0.7
Total Debt to Capital (%) 0.3%
Levered Free Cash Flow zero
Enterprise Value / EBITDA 182.9x

Company Profile: HUYA Inc.

HUYA Inc., through its subsidiaries, operates game live streaming platforms in the People’s Republic of China.

HUYA platforms enable broadcasters and viewers to interact during live streaming. Its live streaming content covers a library of games, including mobile, PC, and console games; and other entertainment genres, such as talent shows, anime, and outdoor activities. The company operates Nimo TV, a game live streaming platform primarily in Southeast Asia and Latin America.

The company also provides online advertising and game-related services. As of December 31, 2018, its live streaming content covered approximately 3,300 games. The company was founded in 2014 and is headquartered in Guangzhou, the People’s Republic of China. HUYA Inc. is a subsidiary of YY Inc.

Expertise: Valuation, financial statement analysis. Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock. His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com. Matt can be reached at matt@finbox.io or at +1 (516) 778-6257.

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