Bankrate (RATE) is a Zacks #1 Rank (Strong Buy) due higher estimates and positive earnings surprises.
Company Description
Bankrate, Inc., together with its subsidiaries, owns and operates an Internet-based consumer banking and personal finance network. The company’s flagship Website, Bankrate.com provides information on financial products and fees, including mortgages, deposits, insurance, credit cards, and other personal finance categories.
Limited Operating History
Bankrate has only three earnings reports under its belt in this iteration of public company life. The company was previously publically owned but then was taken private, only to be spun out again to public investors.
The story for the company remains mostly the same, as the need for interest rate information and products continues to resonate with consumers. The first three earnings reports have seen mostly positive news in the form of two beats and one meet. As analysts and investors return to this story, we expect more analysts to pick up the name and give positive coverage.
RATE Reported Earnings
On February 6, 2012 the company reported revenue of $114 million, $10 million higher than the Zacks Consensus Estimate. In addition, earnings per share came in at $0.17, $0.03 higher than the Zacks Consensus Estimate of $0.14.
Estimates Move Higher
The Zacks Consensus Estimate for 2012 EPS has moved from $0.71 in August 2011 to $0.81 in January 2012, and recently bumped higher to $0.85. The 2013 EPS estimate has also risen from $0.89 in September 2011 to the current level of $1.08.
RATE is not for the faint of heart when it comes to valuation. The stock trades at a premium to the industry average for forward and trailing PE, and by a healthy amount. The stocks hold a 44X trailing multiple compared to 20x for the industry average and a 28x forward multiple versus a 11x industry average. Price to book is also a premium multiple compared to the average as the price to sales metric.
The Chart
A quick look at the chart shows what aggressive growth stock investors are looking for. A steady upward trend over the last six months will draw a lot of attention the name. Don’t let the high valuation scare you off, as those metrics will likely look better after a more earnings reports. RATE is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
