The ADRs (American depositary receipts) of Home Inns and Hotels Management
) dropped another 2.53% Thursday as traders continued to sell into the company’s after-the-close earnings report. But they were in for a surprise.
The Chinese budget hotel company delivered enough to confound the sellers. And to disappoint those of us hoping to buy more on any sell-on-the-news dip. (Home Inns and Hotels Management is a member of my Jubak’s Picks portfolio
The ADRs were headed to a gain of 4.15% in the minutes before the Aug. 10 close.
The company reported earnings of 34 cents an ADR, 3 cents above the Wall Street consensus. Revenue came in at $228.2 million, well ahead of the $214.8 consensus. That was good enough for 60.2% revenue growth from the second quarter of 2011.
But what really turned sentiment, in my opinion, from sell-on-the-news to got-to-get-some was the company’s guidance for the third quarter of $243 million to $248 million in revenue -- versus the $238.3 million consensus -- and the increased guidance for all of 2012 of $899.6 to $914.5 million in revenue against the $871.9 million analyst consensus.
As of Aug. 10, I’m raising my target price slightly to $34 a share by May 2013.
At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. The fund did own shares of Home Inns and Hotels Management as of the end of March. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here.