Yahoo ($YHOO) is reporting earnings after the market closes today. Yahoo has been struggling with its core business lately and investors are eager to see if CEO Marissa Mayer will push ahead with a proposed Alibaba ($BABA) spin-off. Media has also been speculating about the possibility of 15% employee layoff.
We ran the numbers through the SprinkleBit Analyzer to see how Yahoo’s ($YHOO) fundamentals compare to its closest competitors in the market. The competitors, AOL ($AOL), Alphabet ($GOOGL), Microsoft ($MSFT), and Facebook ($FB) were chosen due to their presence in the search and digital advertising space. The analyzer ran the fundamental measures in comparison to the competition, and gave us an implied share price of $ 31.33. With the current trading price of $ 28.42, (2/2 @ 11.20 am) Yahoo ($YHOO) is undervalued with 10.24%
While the fundamental analysis tells you what Yahoo ($YHOO) is worth, the technical analysis shows you where the market may move the price to on a beat or a miss on earnings.
This technical analysis on the daily chart shows that on an earnings miss, the stock can fall to $26. If they beat on earnings, the stock has the potential to rise to $31. With the current trading price of $28.42, (2/2 @ 11.20 am) the trend this shows a possible 8.5% downside and a 9% upside. This represents a risk/reward ratio of 1.07.