IAC/Interactive Corporation (IACI) fell some 8% on Wednesday as its guidance part of its earnings report was in error. The error was due to StreetAccount, a financial information and analytics service provided by FactSet that mistakenly reported that IAC expects an operating loss for the whole company, which was not something that IAC actually reported. Specifically, the glitch resulted in stating the company overall would lose money in 2013 instead of just one small segment of the business (Newsweek). Coming on the back of Google's (GOOG) inadvertent earnings release, this is not exactly a vote of confidence in the companies that are in charge of getting the right data to the S.E.C. It also presents an opportunity for long term investors to get into this cheap growth play.
Key (accurate) highlights from IACI's earnings report:
- The company reported 71 cents a share in earnings, five cents a share above consensus estimates.
- Revenues rose 38% Y/Y to $714mm, over $20mm above consensus.
- Search revenues were up 43% Y/Y. Sales from Match.com were up 35% Y/Y.
- Free cash flow over the first nine months of the year is 19% above same period in 2011.
IAC/InterActiveCorp has a multitude of Web properties in the U.S. and internationally, including Match.com, Ask.com, Dictionary.com and Urbanspoon.com.
4 additional reasons IACI offers solid value at $48 a share:
- The company has a robust balance sheet with $850mm in net cash on its balance sheet (approximately 20% of current market capitalization).
- The median price target held by the 15 analysts that cover the stock is $59 a share.
- The company has now easily beat earnings estimates for seven straight quarters. Look for consensus estimates for both FY2012 and FY2013 to rise over next few weeks on the back of these quarterly results.
- IACI is cheap at 13.5x forward earnings, a discount to its five year average (21.3). The stock sports a five year projected PEG of under 1 (.75).