Bankrate Earnings Preview: Fourth Quarter 2008

Bankrate [[RATE]] is scheduled to report their fourth quarter 2008 results after the market closes on Thursday, February 5. Based on our analysis, we at EarningsPreview.com are expecting RATE to report better than expected results that exceed Wall Street’s expectations.

 

Analyst Expectations

We are forecasting revenues of $41.3 million and EPS of $.37. This would represent a 64% growth in revenues from last year’s $25.2 million in the same period. The current analyst consensus calls for revenues of $42.0 million and $.34 EPS. On October 30, the company indicated that they “expect to be at the mid-to-upper range” of their full year revenue guidance of $164 – 169 million.

 

Bankrate continues to demonstrate their ability to monetize traffic much better than their peers. The company continues to see strong growth in their network traffic as consumers become more diligent about finding good financial resources.

 

The company has done an admirable job of demonstrating its prowess as a diversified financial services company. Despite the fallout from the real estate markets and weak display advertising, the company continues to find additional ways to put their product offerings to the front. Our checks show strong traffic growth as consumers search for low refinance and high savings rates

 

While the company continues to perform well in this recessionary environment, we would not be surprised for management to be conservative in giving full year 2009 guidance.

 

Share Performance

Bankrate’s shares are down 10% since the beginning of the year. In 2008, the company stock outperformed the Dow Jones index’s 34% drop by falling only 21%. 

 

Valuation

Shares are now trading at 19x consensus 2009 EPS estimates. This is currently a discount to their peer group, although we believe that 2009 estimates will continue to be revised downward. Bankrate continues to be a strong growth story which will likely attract more investor interest in the coming months.

 

Recommendation: Buy with a $36 price target.

 

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