ValueClick Inc. (VCLK) was down 15 cents (or 1.60%) pre-earnings (on February 12, 2010). ValueClick will release its fourth quarter results on February 16.
On February 1, ValueClick released its preliminary fourth quarter 2009 revenue of $130.2 million, in line with the company’s guidance range of $128 − $138 million. Revenue fell 13.3% from the year-ago level of $150.1 million. Revenue in the quarter includes $110.4 million from continuing operations and $19.8 million from discontinued operations.
However, the company did not provide any EPS information. As a result of expected margin expansion and reduction in operating expenses, the current Zacks Consensus Estimate for the quarter is 16 cents per share, with a potential upside of 12.50%. The EPS is a decline of 20.0% from the reported fourth quarter of 2008 results.
Moreover, 3 of the 20 analysts covering ValueClick have raised estimates for the fourth-quarter of 2009 quarter in the last 30 days. ValueClick’s focus on lowering operating expenses is one of the major reasons for its potential of maintaining profit levels, even in the face of the significant fall in revenue.
The company has consistently surpassed Zacks Consensus expectations. It has had positive earnings surprises in the last four quarters although the magnitude of surprise has been falling. The third quarter surprise was just 7.14%, compared to 21.43% in the second quarter, 25.00% in the first quarter of 2009 and 33.33% in the fourth quarter of 2008. The surprises averaged to a positive of 21.73% (meaning that on average, ValueClick has beaten the Zacks Consensus by that amount).
While this is positive, year-over-year results continue to be significantly impacted by the continuing effect of the recession and we believe the company will have to focus on its core competency to improve operating efficiencies and leverage growth in earnings and revenue. Consequently, price movement is likely to be downward in the near-term.
While we like ValueClick’s strong cash-flow generation abilities, the stock appears to lack a near-term catalyst to drive it higher. Moreover, weakness in the Comparison Shopping segment and a slower international business, particularly in Europe, may have a negative impact on revenue growth.
This has contributed to the Zacks # 3 Rank, which translates to a short-term ‘Neutral’ rating on the stock.
Read the full analyst report on “VCLK”
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