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SouFun Shares Gain on Solid Q3 Earnings

Zacks Equity Research

Shares of SouFun Holdings Ltd. (SFUN) continue to rally riding on the strength of third-quarter earnings results as well as enhanced revenue guidance for 2013. Shares surged almost 31% since the earnings announcement on Nov 7.

The Zacks Consensus Estimate for 2013 moved north by 5.1% to $2.87 over the last seven days. For 2014 also, the estimate rose 1.2% to $3.47 over the same time frame.

SouFun reported operating net earnings of $1.13 per share, 31% above the Zacks Consensus Estimate and 66% ahead of the year-ago earnings. The outperformance was driven by a sturdy top line that improved 45% year over year. The revenue increase, in turn, was fueled by increase in listing services and SouFun membership e-commerce services.

The company’s investments in technology and products continue to benefit its results. While e-commerce membership services and listing services grew 94.2% and 128% respectively in the quarter, its mobile platform, including WAP and APP, witnessed solid traffic growth.

This marked the 13th straight quarter of improvement as well as results surpassing guidance since SouFun went public. Additionally, it marked the second consecutive quarter of positive earnings surprises.

On the back of solid progress, SouFun raised its top-line expectation for 2013. It now expects to generate revenues in the range of $605-$615 million, up from $538–$548 million guided earlier. The new guidance represents a year-over-year improvement of 40.6% to 42.9%. The Zacks Consensus Estimate of $542 million lies much below the company guidance.

SouFun intends to remain focused to explore new lines of business. We expect this endeavor to enhance its operational performance besides helping it to achieve long-term objectives and enhance shareholder value. The long-term expected earnings growth for SouFun is 36.5%.

SouFun presently sports a Zacks Rank #2 (Buy). WNS (Holdings) Ltd. (WNS), Core-Mark Holding Company, Inc. (CORE) and Furmanite Corp. (FRM) sharing the same Zacks Rank are also worth considering.

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Read the Full Research Report on CORE
Read the Full Research Report on WNS
Read the Full Research Report on FRM

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