On Thursday, Tencent Holdings (700:HK) (OTC: OTC:TCEHY) stock received a confirmation of its Outperform rating and a HK$455.00 price target from Bernstein SocGen Group.
This affirmation came following Tencent's release of its second-quarter financial results for 2024, which demonstrated solid performance. The company reported revenue of RMB161 billion, aligning with both the firm's and the consensus estimates.
However, Tencent surpassed expectations with its non-GAAP operating profit, which reached RMB58.4 billion, marking a 26.9% increase year over year and beating the Bloomberg consensus by 7.0%.
The company's gross profit experienced a significant 21.3% year-over-year growth, reaching RMB85.9 billion. This growth also translated into a 580 basis points expansion from the previous year.
Tencent's current deferred revenue stood at RMB107 billion, which was consistent with predictions and reflective of a robust growth in gaming billings, believed to be over 20% year on year.
Both domestic and international revenue streams for Tencent saw a 9% increase year over year during this quarter. Advertising and Fintech and Business Services (FBS) sectors also reported growth, with advertising revenues up by 19.5% and FBS by 3.7% year over year, closely meeting the Street's expectations. These figures indicate a steady performance by Tencent in key areas of its business operations.
InvestingPro Insights
Following Tencent Holdings' recent financial performance, InvestingPro data reflects a company with a solid market position and promising metrics. With a market capitalization of $433.55 billion and a P/E ratio of 21.52, the company stands as a significant player in the Interactive Media & Services industry. The P/E ratio has experienced a slight uptick to 22.72 over the last twelve months as of Q1 2024, suggesting a market that values its earnings growth potential. Additionally, Tencent has demonstrated robust revenue growth of 8.69% over the last twelve months, underscoring its ability to expand its financial top line in a competitive market.
InvestingPro Tips highlight Tencent's low-price volatility, which could appeal to investors looking for a stable investment in the tech sector. The company's ability to consistently pay dividends for 20 consecutive years is a testament to its financial health and commitment to shareholder returns. For those interested in further insights, there are 6 additional InvestingPro Tips available, providing a deeper analysis of Tencent's financial health and market performance.
Overall, Tencent's strong revenue growth and the ability to cover its interest payments with cash flows, as noted in the InvestingPro Tips, suggest a company that is both growing and managing its finances prudently. The company's next earnings date is set for August 14, 2024, which will be a significant date for investors to watch. For more detailed analysis and tips, interested parties can visit InvestingPro at https://www.investing.com/pro/TCEHY.
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