| Stock (Symbol) | Stock Price | |
Qihoo 360 (QIHU) |
$47 |
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| Data is as of | Expected to Report | Sector |
March 18, 2015 |
May 25 – May 29 |
Technology |
| Sharek’s Take | ||
 Qihoo, China’s #2 search engine, is growing fast but rapidly declining earnings estimates are hampering the stock. Still, even with estimate drops the last 2 qtrs, profit growth is expected to be a robust 42% this year. QIHU’s revenue has soared from $110m to $152m, $188m, $222m, $265m, $318m, $376m and $431m the last 8 qtrs. In years past, Qihoo’s search engine grabbed a quick 20% of the China market share, but little in profits. Now the company has started to realize solid revenue from its search engine, as online advertising was up 70% year-over-year last qtr. 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 30% last qtr, up from 25% 2QtrsAgo and 22% 3QtrsAgo, but down from 38% in the year-ago qtr. At 14x earnings the stock is a real bargain, especially considering the company’s estimated long-term growth rate is 35%. I have to think eventually the stock will make a big turnaround, but estimate declines are hurting the stock. |
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| One-Year Chart | ||
 This is a terrible one-year chart. Last year I was thinking the stock would go to $200. Now QIHU is less than $50. Profit growth was poor last qtr because the company had a great qtr a year ago and comparisons were tough. I love the Annual Profits history, there’s a chance QIHU could have a ten-fold gain in profits within 5 years. |
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| Earnings Table | ||
 Sales growth was a sparkling 95% last qtr, but profit growth was just 7%.QIHU missed estimates by 4 cents last qtr, and these had been declining for months. Annual Profit Estimates look bad and are probably the reason the stock’s down. Quarterly estimates are declining and now profits are expected to be down year-over-year next qtr. |
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| Fair Value | ||
 Profits have grown at a sensational rate, yet the stock gets stuck with just a 14 P/E. I remember BIDU got stuck with a low P/E a couple of years ago, then the P/E rose from 20 to 30. I think when momentum turns this stock could roar higher. |
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| Ten-Year Chart | ||
 Stock been trending down for a while now, yet all the profit figures look amazing, this could be a HUGE comeback story. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
12 of 22 |
Qihoo is doing many things right. Its search engine is starting to show good profits and the company continues to grow like a weed. Profit margins are also returning back to form. This is a 35% grower selling for 14 times earnings, so the stock has huge upside. But the estimate reductions have killed the stock and I suggest investors wait for a rally to make a big bet. |
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Aggressive Growth Portfolio
N/A |
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