SOHU - Sohu.com - stock is attractively valued with a PEG ratio of 0.8

Sohu.com, Inc. recently reported an excellent quarter and guided higher. Its sponsorship of the 2008 Olympic Games should boost revenues going forward as well. Earnings estimates really took off after the company's report. Analysts are now expecting $1.86 per share for the current year, up nine cents from a week ago.

Full Analysis

Sohu.com, Inc. (SOHU) provides a range of online products and services to consumers and businesses in the People's Republic of China. Its products and services to businesses include brand advertising and sponsored search.

The company's products and services to users include aggregated content on various topics, including news, entertainment, sports, business and finance, automobile, real estate, information technology, and women.

Earnings Boom

Earlier this week, the company said that its first quarter profit quadrupled on strong advertising and online game revenue. For the three months ending March 31, Beijing-based Sohu said it earned US$21.6 million (euro13.8 million), or 55 cents (35 euro cents) per share, up from US$4.5 million, or 12 cents per share, for the same quarter of 2007. Revenue surged 156% to US$84.8 million (euro54.4 million), it said.

The company said its revenues were strong despite a quarter that included the Chinese New Year, usually a slow time for Chinese business, and the country's worst snowstorms in decades. China's population of Internet users rose to 221 million in February, possibly tying the United States as the world's largest, the official Xinhua News Agency said last week, citing government data.

Guiding Higher

Additionally, management guided second-quarter revenues above analyst estimates, which caused the stock to rocket higher. For the quarter, Sohu expects revenue of $93 million to $96 million. Analysts anticipate revenue of $77.4 million.

Dr. Charles Zhang, Chairman and CEO of Sohu.com, stated, "We are very pleased with our first quarter of 2008, which was our third consecutive quarter in which we reported record total revenues and record revenues in each category, as well as record non-GAAP net income. We believe that these results are made possible only by our long-term strategic vision regarding the Chinese Internet space, such as our sponsorship of the 2008 Beijing Olympics."

Earnings estimates really took off after the company's report. Analysts are now expecting $1.86 per share for the current year, up nine cents from a week ago. Next year's numbers rose 22 cents to $2.32 per share. SOHU has posted an average surprise of 18.8% over the past four quarters. The stock is attractively valued with a PEG ratio of 0.8.

Content Courtesy: Zacks Investment Research

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