NEW YORK (TheStreet) -- Bankrate (RATE) shares are down 15.7% to $11.65 on Monday after the publisher, aggregator and distributor of personal finance content on the Internet revealed that the SEC was investigating its financial reporting from 2012.
Investigators are looking into three accruals of revenue totaling approximately $781,000 and two adjustments to reduce accrued expenses totaling approximately $850,000, the company said.
Bankrate also announced that Steven Barnhart would serve as interim CFO starting today, replacing former CFO Edward J. DiMaria.
Barnhart was previously Senior Vice President and CFO of Sears Hometown and Outlet Stores.
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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RATE's revenue growth trails the industry average of 44.3%. Since the same quarter one year prior, revenues rose by 23.8%. 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.
- Despite currently having a low debt-to-equity ratio of 0.34, 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 3.25 is very high and demonstrates very strong liquidity.
- The gross profit margin for BANKRATE INC is rather high; currently it is at 64.42%. Regardless of RATE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RATE's net profit margin of -1.71% significantly underperformed when compared to the industry average.
- 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 151.8% when compared to the same quarter one year ago, falling from -$0.89 million to -$2.25 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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