Should SouFun Holdings (SFUN) Be in Your Portfolio Now? - Analyst Blog

On Sep 9, 2014, Zacks Investment Research upgraded SouFun Holdings Ltd. (SFUN) to a Zacks Rank #3 (Hold).

Why the Upgrade?

SouFun Holdings has witnessed rising earnings estimates on the back of second-quarter 2014 results. This business service provider delivered positive earnings surprises in three of the last four quarters with an average beat of 25.1%.

Riding on solid performance across all its business divisions, SouFun Holdings reported second-quarter operating net income of 16 cents per share, which beat the Zacks Consensus Estimate by a penny and was up 6.7% year over year.

Strong growth in the company's marketing services drove a 16.7% rise in SouFun Holdings' revenues. However, revenues lagged the Zacks Consensus Estimate by about 5%.

Though operating expenses increased in the quarter, a higher rise in total revenue drove operating income improvement.

Additionally, SouFun Holdings inked deals with Shenzhen World Union Properties Consultancy Co., Ltd. and Hopefluent Group Holdings Limited, the leading new home agency companies in China. This will help the company to have extensive access to property transactions, enhance its financial services and provide online information regarding real estate development in China.

SouFun Holdings' operational strength and collaborations will help in achieving its revenue target in 2014. The company expects to generate revenues of $727–$739 million, translating into a year-over-year growth of 14–16%. The Zacks Consensus Estimate of $735 million is pegged near the near higher end of the company guidance.

SouFun Holdings strong segmental performance prompted upward revisions in the Zacks Consensus Estimate over last 30 days. For 2014, the Zacks Consensus Estimate moved north by 1.6% to 64 cents and for 2015, it rose 1.2% to 83 cents. The long-term growth is targeted at 12.4%.

Other Socks to Consider

Better-ranked business service stocks worth reckoning include Avis Budget Group, Inc. (CAR), WNS (Holdings) Ltd. (WNS) and Cardtronics Inc. (CATM). While Avis Budget Group and WNS (Holdings) sport a Zacks Rank #1 (Strong Buy), Cardtronics holds a Zacks Rank #2 (Buy).