Why Bankrate Shares Blasted Off
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 Bankrate soared by nearly 19% today after the company upped its forward guidance for the second half of the year.
So what: Bankrate's earnings report came in last night, and it wasn't much to write home about -- revenue of $105.5 million missed the $106 million consensus, and earnings of $0.10 per share likewise fell short of Wall Street's $0.11 EPS target. However, Bankrate now projects revenue growth of 10% to 20% for the second half, which would bring 2013's revenue to approximately $457.2 million at the middle of the range, which now bests the consensus of $454.8 million. That would be even with 2012's result, which also came in at $457.2 million.
Bankrate also expects margin expansion in the second half, and has guided EBITDA margins over the 25% range for the rest of the year. Part of that improvement is likely to come from the company paying off $195 million in high-interest (11.75%) debt with a new debt raise under more favorable conditions.
Now what: After the pop, Bankrate is now rather close to several analyst price targets. Needham's price target is set ay $20, a mere 7% increase over the current price, and Merrill Lynch's $22 price target is 17% higher. With a P/E approaching triple digits, Bankrate is far from cheap. Simply returning to even with last year's result seems inadequate in terms of justifying this big bounce.
Want more news and updates? Add Bankrate to your Watchlist now.
Wall Street has been getting rich on trading floor tips for decades -- and for decades, those tips have been "for industry insiders only." But not anymore. Our top technology analyst recently infiltrated one of the finance world's most exclusive gatherings and left with three incredible investment opportunities, straight from the CEOs. These are profit-building strategies Main Street isn't meant to hear about -- so act now before someone shuts us up. Click if you want "industry insider" earnings -- now!
The article Why Bankrate Shares Blasted Off originally appeared on Fool.com.Fool contributor Alex Planes and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.