Why Constant Contact (CTCT) Stock is Skyrocketing Today
NEW YORK (TheStreet) -- Shares of Constant Contact (CTCT) are soaring higher by 21.84% to $31.80 at the start of trading on Monday morning, after the enterprise software company announced it is being acquired by Endurance International Group (EIGI) for $1.1 billion.
Endurance believes the acquisition will expand its position as a leader in the small business marketing space and enhance its operational and financial scale.
The company will purchase Constant Contact, a Waltham MA-based online marketing tools provider, for $32 per share in cash. The deal represents a premium of approximately 23% over Constant Contacts closing price of $26.10 on October 30.
"Our team has always been passionate about helping small businesses do more business. Joining the Endurance family of brands will allow us to extend our reach and be a better partner to small businesses across the globe," Constant Contact CEO Gail Goodman said in a statement announcing the deal.
Separately, TheStreet Ratings team rates CONSTANT CONTACT INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate CONSTANT CONTACT INC (CTCT) 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 impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CONSTANT CONTACT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CONSTANT CONTACT INC increased its bottom line by earning $0.44 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $0.44).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 89.3% when compared to the same quarter one year prior, rising from $2.02 million to $3.83 million.
- The gross profit margin for CONSTANT CONTACT INC is currently very high, coming in at 80.01%. Regardless of CTCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CTCT's net profit margin of 4.18% is significantly lower than the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Internet Software & Services industry and the overall market, CONSTANT CONTACT INC's return on equity is below that of both the industry average and the S&P 500.
- CTCT has underperformed the S&P 500 Index, declining 23.50% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: CTCT