TheStreet GivesYahoo (NASDAQ:YHOO) A ‘Buy’ Rating.

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By Hanson So on July 17, 2014 Technology & Software

According to the latest research report presented by eMarketer, an independent research firm, Microsoft (NASDAQ:MSFT) is expected to surpass Yahoo (NASDAQ:Yhoo) in the digital advertising industry, for the very time in its history. It is pertinent to note here that the digital advertising industry has a worldwide capitalization of $140.2 billion. The latest digital ad revenue figures of Microsoft have been estimated to be around 2.54 percent whereas the Yahoo’s predicted figures are reported to be around 2.52 percent.

Thetop share gainer in the digital ad market will still be Google (NASDAQ:GOOG), with a share of 31.54 percent, whereas second to Google will be none other than the famous social media site, Facebook (NASDAQ:FB), with a share of 7.79 percent.

Yahoo’s shares are currently at $35.44, down by 0.73 percent. The company is expected to declare the financial results of its second quarter by the end of July 15, 2014.

Analysts at TheStreet gave Yahoo a score of B, with a rating of ‘buy’. The analyst team, when asked about their ratings, said that Yahoo had a number of strengths which were given preference over the weaknesses, in order to give investors an opportunity for better performance. Analysts at TheStreet further stated that the company had strong financial position in the market and its debt levels were reasonable. Moreover, the company had a good stock performance and its profit margins were growing significantly. The weakness of the company was its average net income. However, the strengths were given preference over the weakness, and the company received a ‘buy’ rating.

Some Highlights of the Research Report:

Yahoo’s gross profit margin is very high right now; the figures are reported to be 83.44 percent. Gross profit margin has increased considerably when compared with the last year’s figures. Furthermore, the company’s net profit margin is also above the industry average: 27.50 percent.
Yahoo (NASDAQ:YHOO) has a quick ratio of 3.20, which means that the company will be able to cover its cash needs, at least for the short term. Along with this, the company’s debt to equity ratio is very low: 0.09.
EPS of Yahoo (NASDAQ:YHOO) fell down by 17.1 percent in the first quarter of the year 2014, and with that the company completed its one year pattern of declining earnings per shares. Nonetheless, the analysts at TheStreet expect the trend to be reversed in the upcoming year. Yahoo reported earnings of $1.26 in the recent fiscal year; the figures were quite low when compared with last year’s earnings of $3.28. Analysts in the market are expecting the earnings to reach $1.62 this year.
The closing price of Yahoo (NASDAQ:YHOO) has increased by 31.51 percent when compared with the closing price of its stocks a year back. This increase in the stock prices shows that the company has exceeded expectations and has delivered excellent performance in the market. The jump in the stock prices of the company has brought it to a level which is quite high when compared with other expensive companies of the market. TheStreet, however, believed that the level achieved by Yahoo and the increase in its stock prices was completely justified, keeping in view the company’s strengths.