Recent news of a peace accord between Yahoo (YHOO) and Facebook (FB) regarding patent disputes may be a positive catalyst for Yahoo. Whether or not these two companies have really decided to settle their differences remains in doubt. Court records confirm that neither Yahoo nor Facebook has dismissed its case.

In the wake of Yahoo’s sale of one-half of its 40% stake in Alibaba Group Holding Ltd. resulting in a $7.1 billion windfall for Yahoo, I expected to see favorable market reaction to such a positive catalyst resulting in a meaningful boost in share price. That did not happen. I’m rationalizing that it is probably because none of the sale proceeds have yet to make their way into the company coffers. Today, I will examine these recent catalysts and try to determine where Yahoo is headed. Lets look at Yahoo’s fundamentals first.

Yahoo is trading at about $16 per share and its market capitalization stands at around $19 billion. Trailing twelve month price to earnings is 17.96 and the price to earnings growth ratio is 1.23. Yahoo price to book is reported at 1.46. As a value investor, I would have to say these metrics are within acceptable limits. Return on equity falls short of expectations at 8.75%, but quarterly year-over-year revenue and earnings growth are positive numbers, reported at 0.6% and 28.4% respectively. This positive revenue and earnings territory is something unseen by all too many companies in these turbulent times.

Yahoo’s financial strength is real.To continue reading, click here.