Yahoo Earnings Preview

Yahoo will likely deliver earnings results that are near Wall Street’s consensus expectations.

Yahoo (YHOO: 15.92 +1.27%) is scheduled to report their second quarter 2010 results after the market closes on Tuesday, July 20.

Last quarter, the internet stock reported earnings results that were $.13 above Wall Street’s consensus estimates thanks to the sales of Zimbra and early benefits from their search partnership with Microsoft (MSFT: 30.24 +0.97%). However, YHOO shares fell 5% as revenues fell short of analyst targets.

The current Wall Street consensus estimates are for revenues of $1.16 billion and EPS of $.14. This would imply a 2% increase in revenues from last year’s $1.14 billion. However, analysts expect earnings to grow by 40%. 

Yahoo shares have fallen 8% this year and underperformed the 3% decline in the S&P 500 index. Last year, YHOO shares gained 38% as the stock outpaced the 23% gain in the S&P 500.

Yahoo stock is currently trading at 20x consensus 2011 EPS estimates. Investors probably shouldn’t look for a blow-out quarter from Yahoo, but there are positive signs that a turnaround is in progress in Sunnyvale.