Is AOL’s Stock Undervalued?

With shares of AOL Inc. (NYSE:AOL) trading at around $30.74, is AOL an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Despite AOL being a household name, it’s not what it used to be. Therefore, there isn’t much news to cover, and this approach will be a little different. We will get to the numbers soon, but for now, let’s look at AOL the site as opposed to AOL the business. After all, that’s where it all begins.

AOL is the 70th most visited site in the world, and the 17th most visited site in the United States. Even though the site isn’t as popular as in the past, those are still respectable numbers. On a global scale, AOL has moved up four spots over the past month, but down three spots over the past three months. Traffic is up 3.2 percent over the past three months, page views are down 0.97 percent over the past three months, the bounce rate is down 1 percent over the past three months, and time on site is up 1 percent over past three months.

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According to users, the most likeable feature on the site is strong content. This is great news considering good content should be the number one priority for any website. Coming in a close second is easy navigation – also very important. The least likeable feature is poor customer support.

AOL plans on “redesigning all content sites with responsive design.” Will that make a difference? Probably not. The real goal for AOL should be to make a big splash by offering a highly unique feature or by making an acquisition that would bring AOL back into the forefront of worthwhile news. It is possible that AOL is gun shy because of the Time Warner Cable Inc. deal (NYSE:TWC). If you’re thinking Twitter, AOL can’t afford it. You can scratch that idea.

Let’s take a look at some important numbers for AOL before forming an opinion…