Bear of the day: AutoHome (ATHM) – June 21, 2022

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The stock market was in turmoil. Some industries have been hit harder than others. For a while, Chinese internet stocks have been one of the worst places to be. Since May, there has been a small turnaround in this downtrodden industry. Today’s bear examines whether this rally is warranted or whether the earnings story still doesn’t support it.

I’m talking about Zacks Rank #5 (strong sell) Auto Home (ATHM free report). Autohome Inc. operates as an online destination for automobile consumers in the People’s Republic of China. The company provides interactive content and tools to automotive consumers through its three websites, autohome.com.cn, che168.com and ttpai.cn on PCs, mobile devices, mobile apps and mini-apps. It provides media services, including advertising services for automakers and regional marketing campaigns; and lead generation services including dealership subscription services, advertising services for individual dealerships, as well as used automobile listings and other platform-based services.

This year has been difficult for AutoHome. Zacks consensus estimate for the current year calls for EPS of $2.33 for this year. That is a contraction of 28%. In the past sixty days, three analysts have cut their earnings estimates for the current year, while one has raised its estimates. This knocked current-year estimates down by $2.62. Next year’s figure rose from $3.13 to $2.68 as two analysts cut estimates for next year.

The Internet – Services industry ranks in the bottom 20% of our Zacks Industry Rankings. There are some actions in the good graces of our Zacks Rank in this industry. These include Zacks Rank #1 (Strong Buy) Baidu (BIDU) as well as Zacks Rank #2 (Buy) HealthStream HSTM.

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