How Are IAC’s Websites Performing?

With shares of IAC/InterActiveCorp (NASDAQ:IACI) trading at around $49.78, is IACI 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

IAC was written about in our newsletter on March 8, 2013 and rated an OUTPERFORM. At that time, the stock was trading at $43.57. Therefore, it would have been a good investment. However, is that still the case today?

IAC impressed last quarter with a year-over-year revenue increase of 15.90 percent, and a year-over-year earnings increase of 55.60 percent. On a larger scale, revenue has consistently improved on an annual basis, and earnings have made tremendous improvements since 2008 and 2009. Earnings did drop in 2012, but this shouldn’t be cause for concern. IAC is in a much better place than it was several years ago. It’s now more strategic when it comes to acquisitions and capital allocation.

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IAC is trading at 26 times earnings, which is higher than the industry average of 22 times earnings. However, margins are respectable. Profit margin is 6.15 percent, and operating margin is 12.19 percent. IAC does yield 1.90 percent, which is a nice bonus, especially considering peers like AOL (NYSE:AOL) and Yahoo! (NASDAQ:YHOO) don’t offer any yield.

IAC does have an 8.80 percent short position. This doesn’t add up considering the fundamentals. However, this isn’t the type of stock that would hold up well if the market were to falter. Many bears out there are shorting expensive stocks in anticipation of a market correction. It’s not likely that the majority of these shorts are going after IAC for other reasons. After all, IAC has delivered consistent profits, top-line growth is good on an annual basis, the brand portfolio is highly diversified, monetization methods are effective, the balance sheet is healthy, there is international growth potential, and the Internet is still growing in regards to popularity. Furthermore, analysts like the stock: 14 Buy, 3 Hold, 1 Underperform.

The company culture at IAC is subpar. According to Glassdoor.com, employees have rated their employer a 2.9 of 5, and only 49 percent of employees would recommend the company to a friend. That said, there is an enormous disconnect here. Despite those poor numbers, an impressive 86 percent of employees approve of CEO Greg Blatt. It looks as though leadership is good, but there are problems on lower management levels.

Now for the fun part. Let’s see how well some of IAC’s sites are performing.

 

The information below is based on stats from Alexa.com.

Ask.com

Global Rank: 27

U.S. Rank: 19

Pageviews-Per-User (past three months): Up 13.7 percent

Time-On-Site: Up 5 percent

Bounce Rate (only one pageview per visit): Down 2 percent

 

About.com

Global Rank: 85

U.S. Rank: 36

Pageviews-Per-User (past three months): Down 0.87 percent

Time-On-Site: Down 3 percent

Bounce Rate (only one pageview per visit): Up 1 percent

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OKCupid.com

Global Rank: 693

U.S. Rank: 189

Pageviews-Per-User (past three months): Down 0.96 percent

Time-On-Site: Down 2 percent

Bounce Rate (only one pageview per visit): Up 16 percent

 

Tutor.com

Global Rank: 88,437

U.S. Rank: 23,898

Pageviews-Per-User (past three months): Up 9 percent

Time-On-Site: Down 5 percent

Bounce Rate (only one pageview per visit): Down 6 percent

 

CollegeHumor.com

Global Rank: 3,309

U.S. Rank: 1,458

Pageviews-Per-User (past three months): Down 13.87 percent

Time-On-Site: Down 11 percent

Bounce Rate (only one pageview per visit): Up 12 percent

 

CitySearch.com

Global Rank: 3,507

U.S. Rank: 1,002

Pageviews-Per-User (past three months): Up 8.0 percent

Time-On-Site: Up 8 percent

Bounce Rate (only one pageview per visit): Down 3 percent

 

Urbanspoon.com

Global Rank: 2,155

U.S. Rank: 636

Pageviews-Per-User (past three months): Down 0.89 percent

Time-On-Site: Even

Bounce Rate (only one pageview per visit): Up 1 percent

 

DailyBurn.com

Global Rank: 28,115

U.S. Rank: 8,666

Pageviews-Per-User (past three months): Down 8.79 percent

Time-On-Site: Down 8 percent

Bounce Rate (only one pageview per visit): Down 2 percent

 

Chemistry.com

Global Rank: 7,648

U.S. Rank: 1,371

Pageviews-Per-User (past three months): Up 19 percent

Time-On-Site: Up 9 percent

Bounce Rate (only one pageview per visit): Up 9 percent

 

Vimeo.com

Global Rank: 140

U.S. Rank: 112

Pageviews-Per-User (past three months): Down 2.19 percent

Time-On-Site: Down 3 percent

Bounce Rate (only one pageview per visit): Up 3 percent

 

 

Match.com

Global Rank: 356

U.S. Rank: 92

Pageviews-Per-User (past three months): Down 7.09 percent

Time-On-Site: Down 8 percent

Bounce Rate (only one pageview per visit): Up 11 percent

 

 

Shoebuy.com

Global Rank: 6,700

U.S. Rank: 1,481

Pageviews-Per-User (past three months): Down 1.31 percent

Time-On-Site: Down 4 percent

Bounce Rate (only one pageview per visit): Up 3 percent

 

Overall, website performance is average. There haven’t been many significant changes in either direction.

Let’s take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Strong

IAC has performed well over the past three years. Is this trend likely to continue?

1 Month Year-To-Date 1 Year 3 Year
IACI 2.34% 6.49% 13.73% 120.4%
AOL -9.98% 18.74% 52.01% 94.07%
YHOO -1.60% 32.66% 72.55% 72.66%

At $49.78, IAC is trading above its averages.

50-Day SMA 48.95
200-Day SMA 45.04
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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for IAC is normal. Debt isn’t a concern.

Debt-To-Equity Cash Long-Term Debt
IACI 0.33 679.57M 580.00M
AOL 0.05 467.80M 104.20M
YHOO 0.00 3.01B 36.00M

E = Earnings Have Been Steady

Earnings have substantially improved over the past several years. However, there was a slight setback in 2012. Revenue has improved over the past three years.

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 1,445 1,376 1,637 2,059 2,801
Diluted EPS ($) -1.09 -7.06 0.94 1.85 1.71

Looking at the last quarter on a year-over-year basis, revenue and earnings improved.

Quarter Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012 Mar. 31, 2013
Revenue ($) in millions 640.60 680.61 714.47 765.25 742.25
Diluted EPS ($) 0.38 0.47 0.43 0.43 0.61

Now let’s take a look at the next page for the Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

Conclusion

IAC isn’t the most loved company on the street, which is evidenced by that 8.80 percent short position. However, IAC continues to deliver on the top and bottom lines. As long as that remains to be the case, IAC is an OUTPERFORM.

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All content posted should not be considered professional advice. Please do your own research and consult with a professional financial advisor before making any investment decisions. I don’t have any positions in this stock.