Bear of the day: Autohome (ATHM) – June 14, 2021

Autohome Inc. (ATHM Free Report) is taking advantage of consumers’ rush to buy and search for cars online in China. However, this Zacks # 5 (Strong Sell) saw its annual profit estimates slashed last month.

Autohome operates a website for automotive consumers in China with over 40 million daily active users. It provides original content, a comprehensive automotive library and in-depth auto listing information to auto consumers, covering the entire car buying and owning cycle.

The company has a dealer subscription and advertising service that allows dealers to market their inventory and services through the Autohome platform. Autohome offers sales leads, data analytics, and marketing services to help automakers and dealerships improve efficiency and facilitate transactions.

Autohome operates “Autohome Mall”, its full-service online transaction platform, to facilitate transactions for automakers and dealerships.

It also provides auto finance, auto insurance, used car transactions and spare parts services through its websites and mobile apps.

A Miss of the first trimester

On May 27, Autohome reported its first quarter results and missed Zacks’ consensus by a dime.

The gains were $ 0.92 versus Zacks’ consensus of $ 0.93.

Revenue increased 19.1% year-on-year to $ 281.1 million, while online marketplace and other income grew 74% to $ 82.3 million.

Data product revenue jumped 64.4% from the last year quarter.

“During the quarter, we deepened our cooperation with new energy vehicle (‘NEV’) automakers to seize more growth opportunities. We also upgraded our core application with a more streamlined interface and cleaner features, further improving our user experience and with younger demographics in mind, ”said Mr. Quan Long, CEO and Chairman of the Board.

Why is Autohome a strong sell from Zacks?

The Zacks rank is based on changes to analysts’ earnings estimates.

2 estimates have been lowered on Autohome for 2021 and 2022 in the past 30 days, and none have been increased.

The Zacks Consensus 2021 fell to $ 4.79 from $ 5.16 during that time. This is a profit growth of just 3.5% from 2020, when the company earned $ 4.63.

The Zacks 2022 consensus estimate also fell last month, as 2 estimates were also reduced for next year.

It dipped to $ 5.40 from $ 5.90.

A bargain stock?

Stocks have cooled this year, falling 30.5% year-to-date and 25% last month.

Image source: Zacks Investment Research

They are now trading with a forward P / E of just 14.9.

With strong earnings, the company has a PEG ratio of just 0.9. A PEG of less than 1.0 usually indicates that a business has both growth and value, a rare combination.

American auto retailer online Carvana (CVNA Free Report), by comparison, doesn’t even have a P / E as it is expected to lose $ 1.62 this year. It’s a Zacks Rank # 3 (Hold).

Investors interested in Chinese value stocks should keep Autohome on their shortlist for changes in the Zacks ranking.

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