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Tencent Holdings Limited Quarterly Earnings Preview

Wall Street anticipates an EPS of $0.7 and revenue projections of around $3.05 billion for Tecent in its upcoming quarterly earnings.
Goldman Sachs expresses a positive outlook, forecasting a 20% earnings growth for Tencent, contrasting with Alibaba’s expected decline.
Seeking Alpha analysis deems Tencent an attractive investment, highlighting its appealing valuation metrics, such as a P/E ratio of approximately 29.03 TTM.

Tencent Holdings Limited (PNK:TCEHY), a leading technology company based in China, is gearing up for its quarterly earnings release on Wednesday, May 15, 2024. Analysts from Wall Street have set the earnings per share (EPS) estimate at 0.7, with projected revenue for the quarter at around $3.05 billion. This anticipation builds on the backdrop of Tencent’s significant role in the global tech landscape, competing closely with other giants like Alibaba. The company’s diverse portfolio, ranging from social media platforms to gaming and financial services, positions it uniquely in the market.
Goldman Sachs, a prominent financial institution, has shared its optimistic outlook for Tencent, contrasting sharply with its view on Alibaba. Ronald Keung, the head of Asia internet research at Goldman Sachs, expects Tencent to experience 20% earnings growth. This positive projection is particularly noteworthy against the backdrop of Alibaba’s expected mid-to-high single-digit decline in earnings, as discussed on CNBC International TV. Such divergent expectations underscore the differing financial trajectories of these two tech behemoths.
Adding to the positive sentiment, a recent analysis by Seeking Alpha on May 8, 2024, titled “Tencent: Still A Bargain!”, highlights Tencent as an attractive investment opportunity. The analysis points to Tencent’s appealing valuation, suggesting that the stock remains a good pick for investors. This perspective is supported by Tencent’s financial metrics, including a price-to-earnings (P/E) ratio of approximately 29.03 for the trailing twelve months (TTM), indicating how much investors are willing to pay per dollar of earnings.
Tencent’s financial health is further evidenced by its price-to-sales (P/S) ratio of about 5.46 TTM and an enterprise value-to-sales (EV/Sales) ratio of roughly 5.78 TTM. These ratios reflect the company’s valuation in relation to its sales, suggesting a strong market position. Additionally, the enterprise value to operating cash flow (EV/OCF) ratio of approximately 15.81 TTM provides insight into the company’s valuation concerning its operating cash flow, indicating efficient operations and profitability.
Moreover, Tencent’s earnings yield of about 3.44% TTM offers an insight into profitability from the shareholders’ perspective, complemented by a healthy debt-to-equity (D/E) ratio of around 0.44 TTM. This indicates a balanced approach to debt financing relative to its equity. The current ratio, sitting at approximately 1.50 TTM, suggests that Tencent maintains a healthy balance between its assets and liabilities, further affirming its financial stability and attractiveness as an investment.

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