| Stock (Symbol) | Stock Price | |
Qihoo 360 (QIHU) |
$59 |
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| Data is as of | Expected to Report | Sector |
December 11, 2014 |
Mar 04 – Mar 09 |
Technology |
| Sharek’s Take | ||
 Qihoo’s got star potential. The Chinese Internet company is diversified into personal security software, online search and gaming — and when (if?) it figures out how to make more money off search the profits should come rolling in. Qihoo has almost 30% of the search engine market in China, but is not making as much money of online advertising as it should because it just entered the space less than two years ago and hasn’t figured it all out yet. Still, QIHU’s revenue has soared from $110m to $152m, $188m, $222m, $265m, $318m and $376m the last 7 qtrs. In 2014 the stock got hit due to profit margins taking a hit due to spending on increased marketing and promotions to promote its mobile search services. Margins bottomed 2QtrsAgo, and are now are improving. Operating margin was 25% last qtr, up from 22% the quarter earlier, but down from 36% in the year-ago period. I don’t understand why the stock sells for just 15x earnings — down from 27x last qtr and 37x 2QtrsAgo. The stock’s around a 52-week low yet profits are set to explode 56% in 2015. My Fair Value is $155 — 163% higher than the current price of $59. What am I missing? Qihoo could come roaring back in 2015, but I can’t make it my top pick because the stock should be acting better. |
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| One-Year Chart | ||
 This chart doesn’t look good. At all. QIHU didn’t even hold support at $60. Profits are growing briskly, the Est. Long Term Growth Rate is a fantastic 41% and the P/E is just 15. This stock should be double what its selling for. |
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| Earnings Table | ||
 Profits increased 34% but revenue surged 100%. It would be nice if profits grew as fast as sales, if that happens that might push the stock higher. But with 13% profit growth expected next qtr, we may have to wait.QIHU only beat the street by 2 cents, it only beat by a penny the qtr earlier. It used to beat by more than 20 cents. Annual Profit Estimates didn’t increase. These numbers aren’t bad, but to be a top-five stock we need better. Quarterly estimates show growth should accelerate big time in 2015, but these figures came down a bit. |
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| Fair Value | ||
 I’m taking my Fair Value P/E from 50 to 40 this qtr (down from 60 two qtrs ago) because the company isn’t beating the street and estimates didn’t increase. Look at the profit history thought, from $0.55 in 2011 to maybe 10x that in 2016. A ten fold gain in profits in five years — yet the stock sells for 15x earnings. |
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| Ten-Year Chart | ||
 This chart should also look better. Profits are soaring yet the stock is half what it was at its highs. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
6 of 23 |
I really can’t explain Qihoo’s strange fall. The stock should be double what it is selling for now. I feel this has the most potential of any stock we own, yet I hesitate to make it my top holding as there’s something going on that I’m not aware of. |
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Aggressive Growth Portfolio
3 of 12 |
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