NEW YORK (TheStreet) -- Shares of Chegg (CHGG) were gaining 12.3% to $7.58 after-hours Monday after the textbook company beat analysts' estimates for earnings in the fourth quarter and announced a new agreement with Ingram Content Group.
Chegg reported earnings of 19 cents a share for the fourth quarter, beating analysts' estimates of 15 cents a share for the quarter. Revenue grew 9.4% year over year to $84.4 million for the quarter, compare to analysts' estimates of $85.24 million.
The textbook also announced a new multi-year agreement with Ingram Content Group, under which Ingram will be responsible for purchasing all textbook inventory. Chegg will continue marketing the textbooks under its brand as part of the agreement.
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Ingram will have all responsibilities for new net book investments starting May 1, 2015. Chegg said it will exit its warehouse operations by the end of 2015 as it moves towards 100% digital revenue.
"This deal represents a significant milestone for Chegg that we expect will pay big dividends for students and shareholders alike," Chegg Chairman and CEO Dan Rosensweig said in a statement.
Rosensweig continued, "Students will gain the benefit of Ingram's world-class logistical capabilities and network of warehouses which means they will get their books faster while still receiving all of the benefits of working with Chegg, a brand that they know and trust for textbooks and a lot more. For our shareholders, this is very positive news as it means Chegg will no longer invest our capital in physical textbooks, while maintaining all of the benefits and leverage our other businesses receive from textbooks.
TheStreet Ratings team rates CHEGG INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHEGG INC (CHGG) 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 robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that net income has been generally deteriorating over time."
You can view the full analysis from the report here: CHGG Ratings Report