Tencent (TCEHY) to Report Q2 Earnings: What's in the Cards?

Tencent Holdings TCEHY is set to report second-quarter 2019 results on Aug 14.

In the last reported quarter, the company reported earnings of 32 cents per share that missed the Zacks Consensus Estimate by a penny.

Revenues of $12.66 billion lagged the consensus mark of $13.19 billion.

The Zacks Consensus Estimate for second-quarter earnings has been steady at 35 cents over the past 30 days. The consensus mark for revenues currently stands at $13.34 billion, indicating growth of 15.4% from the figure reported in the year-ago quarter.

Tencent Holding Ltd. Price and EPS Surprise

Tencent Holding Ltd. Price and EPS Surprise

Tencent Holding Ltd. price-eps-surprise | Tencent Holding Ltd. Quote


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

Key Factors to Watch

Tencent has a rich gaming portfolio, which along with a strong distribution capability is expected to drive growth. The company derived almost 33.3% of revenues from online games in the last reported quarter.

Notably, Tencent and NetEase NTES are among the biggest game distributors in China. The company is benefiting from its dominance in the country, which is the world’s largest video game market, in terms of users and revenues. However, stringent regulations are expected to hurt user base growth.

Nevertheless, strong adoption of role-playing games (RPG) such as Free Fantasy Online, MT4 and Saint Seiya, which generate higher average revenue per user (ARPU), is expected to boost gaming revenues in the to-be-reported quarter. Further, continuing momentum for Honor of Kings and Perfect World mobile is a key catalyst.

Moreover, growth in digital content revenues, owing to video streaming subscriptions and live broadcast services, is expected to boost social networks revenues.

Further, momentum in cloud services is expected to continue owing to fast penetration into key sectors, including finance, Smart Retail and municipal services. This is expected to drive FinTech and Business Services revenues in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Tencent has a Zacks Rank #3 and an Earnings ESP of +2.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are a couple of companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

CACI International CACI has an Earnings ESP of +4.02% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank  stocks here.

Cisco Systems CSCO has an Earnings ESP of +0.41% and a Zacks Rank #3.


Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>

Click to get this free report

Cisco Systems, Inc. (CSCO): Free Stock Analysis Report

NetEase, Inc. (NTES): Free Stock Analysis Report

Tencent Holding Ltd. (TCEHY): Free Stock Analysis Report

CACI International, Inc. (CACI): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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

Other Topics


Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More