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XO Group provides multiplatform media services to the wedding, newlywed, and pregnancy markets in the United States. The company provides online and offline services through various media, such as magazines, books, syndication, television, Web sites, and social media under the brand names of The Knot, The Nest, and The Bump.
Estimates have recently moved higher
Future estimate earnings are starting to look better (not worse), as expectations for 2012 have recently moved from $0.26 to $0.31 per share. 2013 is also seeing an improvement in its outlook as analysts have recently bumped estimates from $0.28 to $0.30.
Earnings Surprises Streak
XOXO put up three straight positive earnings surprises, but also has had two negative earnings surprises over the last seven earnings reports.
Over the last three positive earnings surprises, the company has beaten the Zacks Consensus Estimate by $0.04, $0.02 and $0.04 respectively. The reaction of the stock has been mixed, with a nearly 1% gain, a 6.8% loss and a 9% gain in respective quarters.
XOXO Reported Earnings
On February 16, 2012 the company reported revenue of $31 million up from $27 million in the year ago period. In addition, earnings per share came in at $0.09 up from $0.04 posted a year ago and $0.05 higher than the Zacks Consensus Estimate.
The valuation picture for XOXO is mixed. The stock trades at a significant premium to the industry average in terms of PE for both trailing and forward metrics. Price to book, shows the company trading at a deep discount to the industry average with a 1.8x multiple vs. a 4x industry average. Finally, while sales growth has not been anything to get all tied up over, a 2.2x prices to sales multiple is also trading at a deep discount to the industry average of 3.5x.
The price and consensus chart for XO Group shows that analysts have begun to moved their estimates and expectations higher. With an improvement in the economy the wedding industry can look to come out of recent lows, and XOXO is no different. Having bounced significantly from December 2011 lows, the stock appears poised for a solid run through the 2012 wedding season. XOXO is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
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