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GoDaddy (GDDY) Hits All-time High: What's Driving the Stock?

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Shares of GoDaddy Inc. (GDDY - Free Report) hit an all-time high of $42.90 on Jun 7, before closing a tad lower at $42.79.

The company’s shares have charted a solid trajectory in recent times, appreciating over 33% over the last one year, ahead of the Zacks Internet - Delivery Services industry’s gain of roughly 25%. Notably, the company has witnessed an 8.8% jump in share price over the past one month, following its encouraging first-quarter fiscal 2017 results.

Let’s find out what’s supporting the rally.

Earnings & Revenues Beat Estimates, Rise Y/Y

The company reported strong first-quarter results wherein both earnings and revenues exceeded the Zacks Consensus Estimate.

Non-GAAP earnings of a penny per share were up significantly from a loss of 15 cents per share on a year-over-year basis. Revenues of $490 million increased 12.9% year over year.

GoDaddy Inc. Price and Consensus

Impressive Guidance

Management provided strong guidance for the second quarter and expects revenues in the range of $548–$553 million.

For full-year 2017, management raised its revenue guidance to $2.195–$2.225 billion from its earlier guidance of $2.18–$2.22 billion. The new guidance represents year-over-year growth of approximately 20%.

Strong Product and Marketing Roadmap for 2017

GoDaddy’s strong product and marketing roadmap for 2017 is a big positive. In the last reported quarter, the company witnessed a 7% increase in its customer base from the year-ago quarter.

Host Europe Buyout

In April, GoDaddy completed the acquisition of Host Europe Group for €1.69 billion (US$1.79 billion). The deal expands GoDaddy's presence in international markets. It also complements GoDaddy's business as HEG has a similar customer base comprising small ventures and web professionals. This is expected to give GoDaddy a better understanding of the needs of customers.

Positive Estimate Revisions

GoDaddy’s current year estimate revision trend is encouraging. Five estimates moved north in the last 60 days while three moved south. The consensus estimate rose from 21 cents per share 60 days ago to 35 cents per share currently, an increase of 66.7%.

Going Forward

Investment in products, its technology platform, international expansion and customer care as well as delivering innovative and increasingly personalized products and services globally should drive shareholder value.

Zacks Rank and Better Picks

The company currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader technology space include Alphabet (GOOGL - Free Report) , Autohome (ATHM - Free Report) and Square (SQ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected earnings per share growth rates for Alphabet, Autohome and Square are 16.7%, 15.9% and 22.5%, respectively.

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