Will IAC/InterActiveCorp (IACI) Stock Be Helped by Potential Angie's List Deal?
NEW YORK (TheStreet) -- IAC/InterActiveCorp (IACI) has proposed to acquire Angie's List (ANGI) for $512 million in cash.
The media and Internet company has offered $8.75 per share of reviews site Angie's List, a 50% premium over Angie's List share price as of October 12.
IAC has noted that it is willing to consider a combination of Angie's List with its HomeAdvisor business through a tax-free stock-for-stock exchange.
"The combination of the Angie's List brand, highly trafficked website and its network of paying service professionals with our HomeAdvisor business, the category leader which has seen eight consecutive quarters of accelerating growth in its core U.S. business, would cement our position as the premier home services platform," CEO Joey Levin said in a statement.
Shares of IAC are flat in after-hours trading on Wednesday.
Separately, TheStreet Ratings team rates IAC/INTERACTIVECORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate IAC/INTERACTIVECORP (IACI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.1%. Since the same quarter one year prior, revenues slightly increased by 7.2%. 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.
- The gross profit margin for IAC/INTERACTIVECORP is currently very high, coming in at 75.52%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, IACI's net profit margin of 7.82% significantly trails the industry average.
- Despite currently having a low debt-to-equity ratio of 0.54, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that IACI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.63 is high and demonstrates strong liquidity.
- IAC/INTERACTIVECORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, IAC/INTERACTIVECORP reported lower earnings of $2.69 versus $3.27 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.69).
- You can view the full analysis from the report here: IACI
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.