(KONG) Kongzhong Corp – Momentum – Zacks Rank Buy

July 10th, 2009

Kongzhong Corp’s (KONG) share price is up more than 200% this year on strong quarterly results and bullish earnings projections.

Company Description

Kongzhong Corp., through its subsidiaries, provides wireless interactive media and entertainment services to mobile phone users in China. The company was founded in 2002 and has a market cap of $352 million.

Shares of Kong have been rallying for most of the year, helped by the company’s better than expected first-quarter results, reported on May 13.

First-Quarter Results

Sales were up more than 35% from last year to $29.6 million. Income sky-rocketed, jumping to $2.5 million from $88,000, producing earnings of 8 cents per share, 5 cents ahead of the consensus estimate.

Share Buy Back

During the quarterly announcement, Kong noted that it had purchased a total of 568,994 ADS’s (22,759,760 ordinary shares) at an average price of $4.076.

Strong Balance Sheet

The company’s balance sheet also looks strong, with $141.67 million in cash and cash equivalents.

Estimates Jump

Analysts went ahead and boosted their earnings projection after news of the good quarter hit the street, with the current year tacking on 11 cents and climbing to 23 cents per share. The next-year estimate is projecting earnings of 30 cents, a 27% growth projection.

Valuations

Based upon the current-year estimate, this is a fairly pricey stock, trading with a P/E multiple of over 40X, a steep premium to the overall market.

The Chart

Shares of KONG have been on a steady rally for most of the year, recently topping off above $11. Take a look below.

Zacks Investment Research
View original at: Zacks.com

More on this topic (What's this?)
The Mighty KongZhong Keeps Climbing (Fusion Investing and Analysis, 7/22/09)
KongZhong Blows Estimates Away Again (Fusion Investing and Analysis, 8/10/09)
KONG (Samurai Trader, 4/15/11)
KongZhong Blows Estimates Away (Fusion Investing and Analysis, 5/13/09)
Read more on KongZhong at Wikinvest

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