InfoSpace Earnings Preview

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After beating estimates last quarter by $0.07, InfoSpace (NAS: INSP) has set the standard for itself. The company will unveil its latest earnings on Thursday. InfoSpace develops search tools and technologies that assist consumers with finding content and information on the Internet.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back InfoSpace as a buy. But with 66.7% of analysts rating it a buy, InfoSpace is still below the mean analyst rating of its nearest 10 competitors, which average 68.6% buys. Analysts don't like InfoSpace as much as competitor MIVA overall. Two out of two analysts rate MIVA a buy compared to two of three for InfoSpace. Analysts still rate the stock a Moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $55.1 million in revenue this quarter. That would represent a decline of 10.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.11 per share. Estimates range from $0.08 to $0.14.

What our community says:
CAPS All-Stars are solidly backing the stock with 77.4% awarding it an outperform rating. The community at large backs the All-Stars with 76.7% granting it a rating of outperform. Fools are keen on InfoSpace, though the message boards have been quiet lately with only 56 posts in the past 30 days. Despite the majority sentiment in favor of InfoSpace, the stock has a middling CAPS rating of three out of five stars.

Management:
Revenue has fallen for the past three quarters. The company's gross margin shrank by 6.9 percentage points in the last quarter. Revenue fell 8.6% while cost of sales rose 2% to $35.8 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

34.0%

34.3%

35.6%

37.3%

Operating Margin

11.8%

5.3%

4.6%

(0.9%)

Net Margin

(7.2%)

3.5%

18.1%

(0.2%)

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At the time this article was published

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