Yandex NV (YNDX): Why The “Russian Google Inc (GOOG)” Should Continue Its Roll

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Reason 3: Search provider for Mail.ru

As of July 1, Yandex is powering the paid search results for Mail.ru.

This chart should sum up the importance of this agreement:

Source: eMarketer.com

Reason 4: War & Peace-sized metrics

The company located on Leo Tolstoy Street (no, kidding!) has a fat margin and return-on-equity:

Trailing P/E Forward P/E 5-Yr PEG Operating Margin (ttm) ROE (ttm) Debt to Equity (mrq)
Yandex 34.7 24.6 1.0 34.0% 27.4% N/A
Google 26.2 17.7 1.4 23.9% 15.2% 0.1
Yahoo! 7.6 16.3 1.8 15.8% 31.6% 0.9

Source: Yahoo! Finance and finviz; data to Aug. 2.

Analysts expect EPS to increase 38.9% this year, 27.4% next year, and average 28.6% over the next five years. The stock is only followed by two Wall Street firms, so it’s perhaps no surprise that Yandex regularly beats estimates.

Google’s EPS growth estimates for this year, next year, and average over five years are 9%, 18%, and 14.5%, respectively. Yahoo! is a turnaround story, so its stats provide less of an apples-to-apples comparison.

Yandex raised guidance. It now expects revenue for 2013 to increase 34-38%, up from 30-35%, on a ruple-basis. The company cited strength in its core business plus the expected revenue from the Mail.ru deal as reasons.

Bottom line

Yandex appears an attractive investment for those who are OK with moderate risk. It sports strong revenue and earnings growth, fat — and expanding — margins, and a solid ROE. Future growth prospects look promising.

Google Inc (NASDAQ:GOOG) is the main threat to Yandex NV (NASDAQ:YNDX)’s continued strong growth, so investors need to keep an eye on quarterly Yandex-Goggle market share stats. While Google has mega-bucks, I’d not underestimate the home turf advantage.

The article 4 Reasons The “Russian Google” Should Continue Its Roll originally appeared on Fool.com and is written by BA McKenna.

BA McKenna has no position in any stocks mentioned. The Motley Fool recommends Google and Yandex. The Motley Fool owns shares of Google. BA is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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