21Vianet (VNET) Q3 2019 Earnings: What Can You Expect?

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21Vianet Group, Inc. (NASDAQGS:VNET) is scheduled to report Q3 earnings results on November 18, 2019. The company is expected to report earnings of -$0.03/share on revenue of $138.1 million. The consensus earnings per share (EPS) of -$0.03/share is based on a poll of 1 analyst and represents a decline of $0.01/share over the same quarter last year when the company reported earnings of -$0.02/share.

The revenue forecast of $138.1 million based on a poll of 1 analyst implies a year-over-year (YoY) growth of 10.3%. Last year the company reported $125.3 million in revenue for the quarter.

Expected to report EPS of -$0.03/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $138.14 $125.29 10.3%
EPS -$0.03 -$0.02 NM

In the company’s last investor presentation, the company outlined key strategies as:

  • Accelerate cabinet roll-out and accordingly increase our core data center service capacities
  • Capture further market share in the wholesale IDC market and promote hybrid cloud services for our clients
  • Selectively pursue strategic partnerships and investments

The presentation also outlined the following guidance:

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Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 7 tracked quarters, and missed expectations 4 quarters.

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2019 -$0.02 -$0.10 NM Missed
Q4, 2018 $0.10 $0.13 34.3% Beat
Q3, 2018 $0.01 -$0.02 NM Missed
Q2, 2018 -$0.01 -$0.10 NM Missed
Q1, 2018 -$0.01 -$0.14 NM Missed
Q4, 2017 -$0.12 $0.08 NM Beat
Q3, 2017 -$0.12 -$0.09 NM Beat

In the following table, we summarize the company’s stock price movements after earnings releases. 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. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 13.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-19 $6.82 $7.77 13.9% Increase
2019-05-16 $7.97 $8.99 12.8% Increase
2019-03-04 $8.54 $8.44 -1.2% Decline
2018-11-20 $11.31 $10.36 -8.4% Decline

Fundamentals And Technical Analysis

21Vianet is currently trading at $8.20/share, up 1.6% for the day. The company is trading at approximately 68% of its 52-week high of $11.98/share. The company’s stock price is up 18.3% since the last earnings report and down -4.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 45.47 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 -28.5x and a forward P/E multiple of -195.2x.

21Vianet’s current share price also implies a price-to-book (P/B) multiple of 1.2x. The following table summarizes some other key fundamental ratios:

Data as of November 17, 2019
Metric Value
Last Fiscal Period FY2019.Q2
Period End Date June 30, 2019
Stock Price (Current) $8.07
P/E Ratio -28.5x
P/E Ratio (Fwd) -195.2x
PEG Ratio 2.0
Total Debt to Capital (%) 43.0%
Levered Free Cash Flow $62.335 million
Enterprise Value / EBITDA 9.1x

Company Profile: 21Vianet Group, Inc.

21Vianet Group, Inc. is a small-cap stock with a market capitalization of $907 million and a total enterprise value of $1.222 billion. The company operates in the Information Technology sector and IT Services industry.

21Vianet Group, Inc. provides carrier and cloud-neutral Internet data center services to Internet companies, government entities, blue-chip enterprises, and small-to mid-sized enterprises in the People’s Republic of China.

The company offers hosting and related services to house servers and networking equipment in its data centers, and connects them through a data transmission network. Its hosting and related services include managed hosting services that offer data center space to house its customers’ servers and networking equipment, and provide tailored server administration services; and interconnectivity services that enable customers to connect their servers with Internet backbones and other networks through its border gateway protocol network or single-line, dual-line, or multiple-line network.

Its hosting and related services also comprise cloud services that enable businesses to run their applications over the Internet using its IT infrastructure; virtual private network services; Hybrid IT Services, which provide customers with a complete package of infrastructure service offerings; and other value-added services, such as firewall, server load balancing, data backup and recovery, data center management, server management, and backup server services.

In addition, the company provides traffic charts and analysis, gateway monitoring for servers, domain name system setup, defense mechanism against distributed denial of service attacks, basic setting of switches and routers, and virus protections; and managed network service.

As of December 31, 2018, it operated 20 self-built and 38 partnered data centers located in approximately 20 cities with 30,654 cabinets. It has a strategic partnership with Microsoft Corporation. 21Vianet Group, Inc. was founded in 1999 and is headquartered in Beijing, the People’s Republic of China.

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