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Changyou (CYOU) to Report Q4 Earnings: What to Expect?

Changyou.com Limited CYOU is expected to report fourth-quarter 2016 results sometime around Feb 6, 2017. Last quarter, the company delivered a positive earnings surprise of 52.08%. Also, the company delivered positive earnings surprises in the last four quarters, bringing the average to 27.22%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Changyou has gained recognition for its offerings like Tian Long Ba Bu (TLBB) and Blade Online. However, these days, the popularity of PC games is dwindling because of rapid migration to mobile games. To keep up with the change, Changyou has stepped up its R&D efforts to develop more innovative and user friendly mobile games, leveraging its own huge PC games user base.

Changyou is also concentrating on e-sports. E-sports is fast emerging as a lucrative business opportunity. The company is also dabbling into virtual reality. Last year, Changyou and Tencent struck a licensing deal for TLBB mobile games. The company said that it was betting big on Tencent's distribution capabilities along with its research in hard core games to bring erstwhile PC game players to mobile.

However, Changyou is facing operational challenges from the ongoing transition. Also, sluggish online game and advertising businesses continue to hurt margins. Increasing competition remains an added concern.

For the fourth quarter of 2016, Changyou expects total revenue to be in a band of $120 million to $130 million. Online gaming revenues are projected between $85 million and $95 million. Non-GAAP earnings are expected to be in a range of 65 to 66 cents.

Earnings Whispers

Our proven model does not conclusively show that Changyou is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Changyou currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 61 cents.You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Changyou has a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Changyou.com Limited Price and EPS Surprise

Changyou.com Limited Price and EPS Surprise | Changyou.com Limited Quote

Stocks to Consider

Here are a few stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Twilio Inc. TWLO with an Earnings ESP of +8.33% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Pandora Media, Inc. P with an Earnings ESP of +8.11% and a Zacks Rank #3.

CenturyLink, Inc. CTL with an Earnings ESP of +1.79% and a Zacks Rank #3.

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Changyou.com Limited (CYOU): Free Stock Analysis Report

CenturyLink, Inc. (CTL): Free Stock Analysis Report

Pandora Media, Inc. (P): Free Stock Analysis Report

Twilio Inc. (TWLO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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