Can RetailMeNot Survive Its Q2 Results?

| About: RetailMeNot, Inc. (SALE)
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By Carly Forster

RetailMeNot, Inc. (NASDAQ:SALE) is an Austin, Texas-based online digital coupon marketplace that allows consumers from all over the world to find hundreds of thousands of digital coupons from countless brands and retailers. With more than 625 million visitors over the past 12 months as of June 30th, the company is the largest online digital marketplace around the globe. However, the website released its second-quarter earnings report on August 4th, and its results were rather mediocre.

During its Q2 results, RetailMeNot reported $0.08 GAAP earnings per share, beating analysts' consensus estimate of $0.06 by $0.02. During the same quarter last year, the company posted -$0.68 earnings per share. The website had revenue of $59.50 million for the quarter, compared to analysts' consensus estimate of $60.23 million. RetailMeNot's quarterly proceeds were up 37.1% on a year-over-year basis. On average, analysts predict that the coupon company will post $0.92 earnings per share for the current fiscal year.

A reason for RetailMeNot's mediocre second quarter is due to Google reformulating its algorithm this past May, hurting companies who offer online coupons in its search results. In fact, the website's stock has dropped nearly 60% since the end of February's high of $47. However, the company is hopeful that it is heading in the right direction. RetailMeNot CEO, Cotter Cunningham tried to soften the blow of Google's algorithm shift saying, "We don't see anything in this [shift] that gives us more pause than previous ones or increases our concern."

Shares of RetailMeNot opened at $18.17 on Tuesday, August 5th. The website has a 1-year high of $48.73 and a 1-year low of $18.10. The stock's daily moving average is $18.24, and has a 50-day moving average of $25.47. The market cap for RetailMeNot is $974.42 million, and its P/E ratio is 58.80.

On August 5th, William Blair analyst Ralph Schackart reiterated an Outperform rating. He reasoned, "the current valuation could be attractive to investors who can stomach near-term volatility as the company continues to work through the decline in organic search traffic." Schackart has a +24.5% average return on all stocks and a 73% success rate in making recommendations.

On the other hand, on August 5th, InvestorPlace blogger Portfolio Grader did not speak so positively about the couponing website. The blogger pointed out the large drop in stock price on Tuesday. Portfolio Grader has a -0.1% average return on all stocks and a 39% success rate in making recommendations.

Whose recommendation do you trust?

Disclosure: None