YY Q3 Earnings: Is YY Cheap at 7.9x Price/EPS?

in EARNINGS/INVESTING IDEAS by

YY Inc. (NASDAQGS:YY) is scheduled to report Q3 earnings after close of trading on November 11, 2019. The company is expected to report earnings of $0.81/share on revenue of $947.2 million. The consensus earnings per share (EPS) of $0.81/share is based on a poll of 11 analysts and represents a decline of -53.4% over the same quarter last year when the company reported earnings of $1.73/share.

The revenue forecast of $947.2 million based on a poll of 13 analysts implies a year-over-year (YoY) growth of 60.9%. Last year the company reported $588.8 million in revenue for the quarter.

Expected to report EPS decline of -$0.93/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $947.17 $588.84 60.9%
EPS $0.81 $1.73 -53.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters but missed expectations the last 2 quarters.

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

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2019 $1.01 $0.73 -28.1% Missed
Q1, 2019 $1.38 $1.35 -2.2% Missed
Q4, 2018 $1.85 $1.92 3.4% Beat
Q3, 2018 $1.67 $1.73 3.7% Beat
Q2, 2018 $1.82 $1.95 7.4% Beat
Q1, 2018 $1.58 $1.68 6.8% Beat
Q4, 2017 $1.80 $2.33 29.3% Beat
Q3, 2017 $1.47 $1.59 8.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Before” column shows the closing stock price on the day before the earnings report, and the “Price After” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 3.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-13 $51.77 $53.35 3.1% Increase
2019-05-28 $64.12 $66.98 4.5% Increase
2019-03-04 $70.88 $81.44 14.9% Increase
2018-11-12 $64.73 $60.36 -6.8% Decline

Fundamentals And Technical Analysis

YY is currently trading at $65.37/share, up 0.5% for the day. The company is trading at approximately 74% of its 52 week high of $88.85/share. The company’s stock price is up 26.3% since the last earnings report and up 9.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 65.61 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 7.9x and a forward P/E multiple of 16.8x.

YY’s current share price also implies a price-to-book (P/B) multiple of 1.1x. 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) $65.37
P/E Ratio 7.9x
P/E Ratio (Fwd) 16.8x
PEG Ratio 0.4
Total Debt to Capital (%) 11.3%
Levered Free Cash Flow NM
Enterprise Value / EBITDA 9.9x

Company Profile: YY Inc.

YY Inc. is a mid-cap stock with a market capitalization of $5.285 billion and a total enterprise value of $3.216 billion. The company operates in the Communication Services sector and Interactive Media & Services industry.

YY Inc. engages in the live streaming business in the People’s Republic of China. The company operates YY Live platform, an online music and entertainment live streaming service; Huya platform, a live streaming platform, including online games, console games, mobile games, entertainments, sports, etc.; and Bigo, a leading short-form video social platform. Its platforms enable users to interact in live online group activities through voice, text, and video. The company’s primary product is YY Client, which enables users to engage in live streaming online; and offers access to user-created online social activity groups. It also provides game center on YY Client, including a game lobby and VIP game access.

The company also offers YY Live APP and Huya APP mobile applications to provide various live streaming contents to its users through mobile operating systems. Further, it develops and operates YY.com and Huya.com, as well as other personal computer (PC) Websites, such as 100.com, Duowan.com, etc. that enable users to conduct real-time interactions and watch live streaming content through Web browsers on PC and mobile, without requiring any downloads or installations.

YY Inc. was founded in 2005 and is based in Guangzhou, the People’s Republic of China.

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