Why Bankrate (RATE) Is Down Today

NEW YORK (TheStreet) -- Bankrate  (RATE) was falling 3.73% to $18.25 at 12:06 p.m. on Wednesday after the consumer financial services company announced the pricing of its secondary public offering.

The company announced it had priced its 14 million shares of common stock at $18.25. The underwriters also have a 30-day option to buy up to an additional 2.1 million shares of common stock. Goldman Sachs is the head book-running manager on the offering and represents the underwriters. Bank of America/Merrill Lynch and RBC Capital Markets also act as joint book-running managers.

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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 revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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

  • The revenue growth came in higher than the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 31.1%. 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.
  • This stock has managed to rise its share value by 84.24% over the past twelve months. Although RATE had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Despite currently having a low debt-to-equity ratio of 0.35, 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 3.50 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 1129.7% when compared to the same quarter one year ago, falling from $0.34 million to -$3.54 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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