Why Web.com Group Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Web.com popped more than 10% during intraday trading Wednesday after the Internet services and small business marketing specialist turned in better-than-expected third-quarter results.
So what: Adjusted quarterly sales rose 9% year over year to $134.8 million, which translated to a non-GAAP net income of $0.55 per share. For reference, analysts were looking for earnings of just $0.53 per share on sales of $134.22 million.
As a result, Web.com also raised the bottom end of its full-year 2013 revenue guidance and now expects sales in the range of $531 million to $534 million. In addition, it revised projections for its full-year 2013 adjusted net income to $2.11 to $2.12 per share, up from the previous range of $2.02 to $2.07 per share.
Now what: Web.com CEO David Brown weighed in, "We are delivering the acceleration in revenue and average revenue per user growth that we targeted through our strategy of cross-selling our value-added services into our three million plus subscriber base, while consistently adding net subscribers and maintaining best-in-class customer retention rates."
The quarter was definitely a strong one for Web.com, though it's worth noting the company is still unprofitable on a GAAP basis. Still, considering shares currently trade for just 11 times next year's earnings estimates, patient long-term investors could be rewarded if Web.com can maintain its momentum and achieve sustained profitability down the road.
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The article Why Web.com Group Shares Popped originally appeared on Fool.com.Fool contributor Steve Symington has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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