Does Google Finance Pose a Threat to Edgar Online? (EDGR, GOOG)

The Microcap Speculator submits: While most market watchers focus on the effect that today's launch of Google Finance will have on Yahoo!, I think another publicly-traded company is far more vulnerable.

Edgar Online (EDGR) derives the bulk of its revenues from selling a convenient way to access filings in the SEC's EDGAR database -- the same sort of data that Google excels in indexing and giving away, for free, in an easily searchable format. The threat is not, as Rumsfeld likes to say, imminent. In fact, EDGAR Online currently provides data to Google Finance, as does Yahoo! Pull up a quote in Google Finance, click on the "SEC Filings" link on the bottom left of the screen, and you will see an Edgar Online branded results page. The basic HTML Edgar filings can be accessed immediately, but Word, PDF and Excel formatted versions require an Edgar Online subscription.

In the short term, Google Finance traffic could drive Edgar Online subscriptions, but what about the next iteration of Google Finance? Financial portal guru Bill Bishop is already calling for Google to include free Edgar data, and I join his call (note: I currently subscribe to a paid Edgar service offered by a competitor, 10kwizard.com). Similarly, Yahoo! Finance could build out Edgar offerings to keep its lead on Google Finance. Either way, the writing is on the wall.

Edgar Online shares appear awfully rich in light of this threat. Despite continuing to lose money, EDGR is trading near 5-year highs. Granted, the company has developed XBRL and institutional products, but these only account for a fraction of its sales. Nor is the overall sales level impressive -- the company only did $14.23 million in sales last year and trades at a whopping enterprise value-to-sales ratio of 6.93.

DISCLOSURE: I have no position in EDGR. Not a recommendation to buy or sell any security. For informational and educational purposes only.