Changyou.com Ltd (CYOU) has seen big gains in 2011, recently hitting a new all-time high after reporting another strong quarter. With estimate son the rise and a bullish growth projection, this Zacks #1 Rank stock isn’t playing games with momentum.
Company Description
Changyou.com Ltd develops and operates online games in the peoples republic of China. The company was founded in 2003 and has a market cap of $1.95 billion.
Although CYOU recently pulled back with the market, the long-term trend is still very bullish. That movement has been supported by impressive earnings growth, on display in early August with strong Q2 results that came in ahead of expectations.
Second-Quarter Results
Revenue for the period was up 35% from last year to $54 million. Earnings also came in strong at $1.02, 11% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 7% over the last four quarters.
The good quarter was driven by an increase in the company’s user base, with registered accounts up 34% from last year to 132 million.
Financial Profile
Changyou’s strong margin profile has enable it to build an awesome financial profile, with cash and short-term investments up $119 million from last year $414 million against no long-term debt.
Estimates
We saw some decent movement in estimates off the good quarter, with the current year adding 12 cents to $4.10 while the next-year estimate gained 38 cents to $5.05, a bullish 23% growth projection.
Valuation
But in spite of the gains, the valuation picture looks awesome, with CYOU’s PEG ratio of .47 well below the benchmark of 1 for value.
12-Month Chart
On the chart, shares recently hit a new all-time high before pulling back with the overall market. Look for support from the long-term trend on any weakness. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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