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Autohome (ATHM) Q3 Earnings Beat, Stock Down on Revenue Miss

Shares of Autohome Inc. ATHM are down 10.8% since the company reported mixed third-quarter 2020 results on Nov 30. The company reported third-quarter non-GAAP earnings of $1.11 per share, which beat the Zacks Consensus Estimate by 2.8%.

However, revenues of $341 million lagged the Zacks Consensus Estimate of $342 million. Nevertheless, on a year-over-year basis, the top line improved 12.2% (as reported in dollar terms), driven by growth witnessed in Online marketplace and other revenues.

Notably, on a year-to-date basis, Autohome stock has returned 18% compared with industry’s rally of 33.1%.

Top-Line Details

Media services revenues (40% of total revenues) were $136.6 million, up 12% year over year (as reported).

Leads generation services revenues (36.3% of total revenues) of $123.8 million improved 8.1% year over year, owing to increase in average revenue per paying dealer.

Meanwhile, Autohome’s Online marketplace and other revenues (23.7% of total revenues) of $80.7 million witnessed year-over-year growth of 31.4%. The upside was driven by data products with traction across OEMs and dealers. Data products business recorded year-over-year growth of nearly 51% in the quarter. The company’s latest Smart Store 2.0 data product has reached dealer base of 2,700.

Autohome’s daily average users were 39 million, and improved from June figures, showing strength in demand.

The road trip business continues to witness robust growth. The gross merchandise volume (GMV) for the first nine months of 2020 more than doubled compared with full-year 2019 GMV. In the third quarter, revenues from used car business unit raked in double-digit growth on a year-over-year basis.

Revenues from new initiatives grew 31% on a year-over-year basis and contributed 24% to the total revenues.

Margin Details

Management noted that gross margin was "stable" at 89% in the third quarter.

Meanwhile, total operating expenses of $216.2 million, climbed 8.3% year over year.

The company reported operating profit of $109.6 million up 22.3% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $144 million compared with $119 million reported in the prior-year quarter.

 

Autohome Inc. Price, Consensus and EPS Surprise

Autohome Inc. price-consensus-eps-surprise-chart | Autohome Inc. Quote

Balance Sheet

As of Sep 30, 2020, Autohome’s cash and cash equivalents (and short-term investments) totaled $1.98 billion compared with $1.84 billion as of Jun 30, 2020. In the third quarter, net cash provided by operating activities amounted to $74.2 million compared with $65.9 million reported in the second quarter.

Q4 Guidance

Autohome’s revenues are anticipated to be $364.5-$365.9 million. The company reported revenues of $334.6 million in fourth-quarter 2019.

Robust adoption of online marketing services on the heels of shift to online channels, triggered by coronavirus crisis, is likely to cushion the top-line growth.

Solid uptick in new data products, including data analysis and marketing services, aimed at enabling automakers and dealers boost efficiency and facilitate transactions is also expected to drive the top line.

Zacks Rank & Stocks to Consider

Autohome currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Cirrus Logic CRUS, Qorvo QRVO, and Avnet AVT. All the stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Cirrus Logic, Qorvo and Avnet is pegged at 7.1%, 15.8% and 19%, respectively.

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