Why Constant Contact (CTCT) Stock Is Higher On Friday

NEW YORK (TheStreet) -- Shares of Constant Contact Inc. (CTCT) are higher 5.49% to $27.66 on Friday, after reporting its financial results for the 2014 first quarter.

The company, which provides marketing tools for small organizations, businesses and non-profits, reported revenue increased 15.6% to $78.9 million, compared to $68.2 million from the 2013 first quarter.

Adjusted EBITDA was  $11.0 million from $6.9 million during the same quarter last year.

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GAAP net income was $850,000, or 3 cents per diluted share, compared to a GAAP net loss of -$650,000, or -2 cents per diluted share.

Non-GAAP net income was $5.0 million, or 16 cents per diluted share for the 2014 first quarter, up from $1.5 million, or 5 cents per diluted share for the same period in 2013.

TheStreet Ratings team rates CONSTANT CONTACT INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONSTANT CONTACT INC (CTCT) a BUY. This is driven by some important positives, 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, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these 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:

  • CTCT's revenue growth has slightly outpaced the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 13.0%. 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.
  • CTCT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CTCT has a quick ratio of 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for CONSTANT CONTACT INC is currently very high, coming in at 80.12%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CTCT's net profit margin of 6.02% significantly trails the industry average.
  • Net operating cash flow has increased to $12.96 million or 11.05% when compared to the same quarter last year. Despite an increase in cash flow, CONSTANT CONTACT INC's cash flow growth rate is still lower than the industry average growth rate of 22.21%.
  • Compared to its closing price of one year ago, CTCT's share price has jumped by 106.45%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: CTCT Ratings Report
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