investora2z
11年前
Slower than expected pace of growth in top-line led to a sell-off in the stock. It has recovered, but the weakness is not over. The valuations are better after the fall. However, some analysts have expressed doubts about the future performance of the company. One article on seekingalpha was particularly negative about the prospects, and the author predicted lower earnings in 2014. The analyst predicted revenue growth to be between 0-6% next year as headwinds from mobile and a less-friendly search algorithm continue. He expects the EPS to come in between $3.85 and $4.05. In the last quarter, there was 6% yoy growth in revenues, though there was a 5% sequential decline. The EPS came in much better than estimates as the net income increased by 138% on a yoy basis. Even the sequential growth was significant. The article mentioned that IAC is generating less revenue per eyeball, indicating less than optimal monetizing of the consumer base. IAC's websites are not that suited for viewing through mobile devices yet, and hence monetizing may not be optimal. The recent change in fortunes of Facebook are primarily based in increased confidence in its ability to leverage the transition to mobile devices. IAC's dependence on Google may hurt its growth prospects because Google may continue to update its algorithm to the disadvantage of others. However, considering the good performance of IAC over the years, one cannot underestimate its ability to improve its performance. Increased use of internet through mobile devices can also be viewed as growth opportunity. IAC's investments into emerging growth segments may help improve growth in the long term. It invested in fantasy sports where Yahoo (YHOO), Comcast (CMCSA) and MGT Capital Investments (MGT) have put in their money. So while analysts may turn negative, one can remain cautiously optimistic. Performance over the next couple of quarters needs to be watched carefully.
investora2z
12年前
Earnings will be released on July 31. That will be an important trigger for IACI. In the last quarter, revenues had increased by ~16% and the net income had gone up by 55% on yoy basis. However, the revenues had declined by 3% sequentially. The stock has already appreciated by 37% from the 52 week low in January, and it is important that the fundamentals catch up quickly. The earnings need to deliver positive surprises, otherwise there may be a bit of correction. The recent rise in the stock has stretched the valuations a bit as the trailing P/E is now around 27. The forward P/E is around 11 and the PEG is 0.44, which indicates that there are expectations of good growth in the net income over the next few quarters / years. Since the expectations are high, there is little room for slippages. Going by the recent track record of the company, the fundamental growth story is likely to continue. The revenues have doubled since 2009, and the bottomline has improved significantly. In 2009, the revenues were $1.35 billion, while in 2012, the company recorded a revenue of $2.8 billion. In 2009 the company posted a net loss of $978 million, while it recorded a profit of $159 million in 2012. Future growth may come from new segments/ businesses, and the company can be expected to foray into new arenas. It has recently invested in DraftStreet which is involved in daily fantasy sports. This segment is likely to show tremendous growth over the next few years, and several big and small players, like Yahoo (YHOO), Comcast (CMCSA) and MGT Capital Investments (MGT), have invested in fantasy sports recently. Comcast has invested $11 million in Fanduel.com and MGT has invested in Fanthrowdown.com. If IACI delivers a good set of numbers, the recent up trend in the stock may gain strength.
investora2z
12年前
Though it is up only 7% on a 52 week basis, it has shown a good 20% appreciation from its 52 week low made in January. So the short term investors may not be complaining. Even on a longer term, the stock has tripled since May-June 2009. The revenue growth has been good, and the company has done well on the net income recently. In the last quarter, the revenues had grown by 15% and the net income had increased by 55%. It recently ventured into the daily fantasy sports by investing in DraftStreet, a smaller company engaged in the shorter version of the game. The daily fantasy sports wagering segment is picking up fast with smaller players like MGT Capital Investments (MGT) committing funds. Bigger players like Yahoo (YHOO) and Comcast (CMCSA) have also invested money. Comcast invested $11 million in Fanduel.com through its venture capital arm. MGT has invested in Fanthrowdown.com, which is more focused on the daily segment. The concept of instant gratification in the shorter version is catching up, and is expected to show exponential growth over the next few years. DraftStreet had already got funding from Atlas Ventures recently. IACI will surely benefit from the growth story as it has entered at the initial stages. As per estimates, on an average a site takes 10% cut in the prize money. However, the benefits may be visible over the longer term as the exposure taken by IACI is indirect. The forward P/E of 10 (fye 2014) and PEG of 0.39 do indicate that the valuations remain reasonable, and there is expectation of growth over the next few years. If the fundamentals support, the growth in stock may be better in 2013. Of course, the underlying assumption is that the market will remain sensible and there are no negative surprises from the company.
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