REFILE-BUY OR SELL-Is $17 a good rate to buy Bankrate?
(Refiles to correct date in dateline)
By Tenzin Pema and Anurag Kotoky
BANGALORE, March 10 (Reuters) - Bankrate Inc RATE.O shares have lost about half its value since the financial information-based website operator posted a 34 percent drop in fourth-quarter profit early last month.
Bankrate shares, which closed at $17.02 Monday, trade at about 10.16 times average analyst earnings-per-share estimate for fiscal 2009, much below the 23.09 times average for the sector for the same period.
Valuations also appear cheap when compared with other companies that depend on advertising revenues.
Bankrate shares trade below the 24.33 times average 2009 per-share profit estimate for Internet media company IAC/InterActiveCorp (IACI.O: Quotazione) and far below that of Yahoo Inc (YHOO.O: Quotazione), which trades at 34.34 times estimated 2009 earnings.
So, does this relatively low valuation mean that investors should view Bankrate shares as a buying opportunity? Or should investors brace themselves for more downside from current levels?
Will the problems in the company's display advertising and credit card businesses continue to dampen outlook and hurt the stock's performance, or is there a recovery in sight?
STILL A BUY Continua...