Why HomeAway, Inc. 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 HomeAway, jumped nearly 16% Thursday after the online vacation rental specialist turned in better-than-expected third-quarter results, and strong forward guidance.

So what: Quarterly revenue rose 23.3%, to $90.1 million, which translated to 35.7% higher adjusted earnings of $0.19 per share. Analysts, on average, were looking for earnings of just $0.16 per share on sales of $89.15 million.

In addtion, HomeAway issued fourth-quarter revenue guidance in the range of $85.5 million to $86.5 million, also exceeding average estimates, which called for Q4 sales of $85.53 million.

Now what: CEO Brian Sharples weighed in: "The second half of 2013 is proving to be a very exciting time for HomeAway. In particular, the third quarter marked several advancements in pursuit of accelerating growth in listings and improving competitive positioning."

To be sure, this quarter was solid for HomeAway, and I'm not surprised by today's pop. But at roughly 45 times next year's earnings estimates, investors should also keep in mind the stock is trading at a premium, even considering its impressive earnings growth. Going forward, while shares could admittedly have some room to run from here, I'd personally prefer waiting for a pullback before stepping in.

Got iPad?
Apple's newest iPad Mini with Retina display might be hard to come by this quarter, given all the reports of supply constraints. Well, we're going to be sure to get a few -- and give them away! That's right: For the first time ever, The Motley Fool is hosting a contest where you can win a free iPad Mini with Retina display. All you have to do is tell us why you love The Motley Fool by clicking here! We'll pick the three most Foolish submissions to receive a free iPad Mini with Retina display.

See full terms and conditions by clicking here

The article Why HomeAway, Inc. Shares Popped originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends HomeAway. 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story