For the time being, it seems Marissa Mayer has stopped the hemorrhaging over at Yahoo! Inc (NASDAQ:YHOO). The internet giant surprised to the upside on Q3 EPS when they reported $0.52, $0.19 higher than the Estimize consensus, resulting in YoY growth of 53%. Revenues after traffic acquisition costs came in at $1.09B, also above the Estimize expectation for $1.06B. The company’s floundering advertising business seemed to make a comeback, with the number of ads sold increasing 24% from Q3 2013, however the price-per-ad fell 24%. In Yahoo’s Search segment, the number of paid clicks was flat YoY, but price-per-click increased 17%. Commenting on the report, CEO Marissa Mayer said, “We achieved this revenue growth through strong growth in our new areas of investment - mobile, social, native and video - despite industry headwinds in some of our large, legacy businesses.” She went on to say that revenue on mobile is now material, coming in above the $200M mark on a GAAP basis, with the expectation for mobile to top $1.2B in revenue this year. Good results pushed growth for the IT sector up to 5.7% from 5.3% earlier in the day.
Tomorrow, approximately 95 publicly traded companies will report earnings, 33 of which are in the S&P 500. We’ll be watching for Yelp’s report after the closing bell. This is the first report since the company struggled with negative press regarding alleged manipulation of reviews, something US courts deemed legal. Despite stiff competition in it’s local ad segment from the likes of Google Inc (NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB) and TripAdvisor Inc (NASDAQ:TRIP), the company posted stellar results in the latest quarter, beating the Street’s EPS estimate by $0.07 and revs by $1.1M. With the mobile advertising market exploding, Yelp Inc (NYSE:YELP) is expected to post EPS results of $0.06, which would beat Wall Street by $0.03. They have a very important strategic asset that makes them a likely takeover target, right now there 18 acquisition predictions on Mergerize, with the potential acquirers being TripAdvisor, Yahoo!, Facebook, Alibaba Group Holdings Ltd (NYSE:BABA), Google and Apple Inc (NASDAQ:AAPL).
How Are We Doing?
Expectations for S&P 500 earnings growth for the third quarter stand at 9.7%. Revenues are anticipated to come in with 4.4% growth. All 10 sectors are anticipated to post positive YoY growth on both the earnings and revenue front.
Leaders
Earnings:
Energy (13.5%). Notable industry: Oil, Gas & Consumable Fuels (14.5%)
Materials (12.7%). Notable industry: Metals & Mining (23.8%).
Consumer Discretionary (12.2%). Notable industry: Internet & Catalog Retail (22.5%)
Revenues:
Health Care (10.0%). Notable industry: Biotech (38.7%).
Information Technology (6.7%). Notable industry: Internet Software & Services (15.0%)
Laggards
Earnings:
Utilities (2.5%). Notable industry: MultiUtilities (0.3%).
Telecommunication Services (1.8%): All five companies are within Diversified Telecom Services. Only Verizon posted yoy growth.
Revenues:
Energy (0.7%). Notable industry: Oil, Gas and Consumable Fuels (-0.1%).
Materials (2.2%). Notable industry: Paper & Forest Products (-10.9%).
Beat/Miss/Match
Earnings: 113 companies have reported thus far, 54% have beaten the Estimize consensus, 35% have missed and 11% have met. This is compared to Wall Street estimates, of which 68% of companies have beat on the bottom-line, 26% have missed and 6% have met.
Revenue: 56% have beaten the Estimize consensus, 44% have missed, and 0% have met. For revenues, 63% of companies have beat the Wall Street estimate, while 37% have missed.
