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Why Bankrate (RATE) Is Gaining Today

NEW YORK (TheStreet) -- Bankrate (RATE) gained 19.5% to $20.80 Friday after beating analyst estimates for earnings and revenue in the fourth quarter.

The company reported earnings of 17 cents a share for the fourth quarter. Analysts surveyed by Thomson Reuters expected earnings of 15 cents a share. Revenue rose 31.2% to $122.3 million in the quarter, higher than analyst estimates of $120.2 million.

In its full year 2014 forecast Bankrate expects revenue of between $520 million and $530 million. Analysts predict revenue of $522.5 million for the year.

TheStreet Ratings team rates BANKRATE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BANKRATE INC (RATE) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, RATE's share price has jumped by 32.95%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • RATE's revenue growth trails the industry average of 16.7%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.82 is very high and demonstrates very strong liquidity.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 402.8% when compared to the same quarter one year ago, falling from $2.56 million to -$7.75 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, BANKRATE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: RATE Ratings Report

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