Shares of IAC/InterActive Corp. (IACI) gained significant momentum following its back-to-back acquisitions of About.com and DateHookup.com. This provider of e-commerce, media and web services delivered impressive second quarter 2012 results in late July and doubled its dividend payout. The stock became a Zacks #1 Rank (Strong Buy) on October 12, 2012, and is scheduled to report third-quarter results next week. IAC/InterActive shares have jumped nearly 28.6% year to date.
Q3 Report Near
IACI is scheduled to report third-quarter results on October 24. The Zacks Consensus Estimate is at 51 cents per share.
On July 25, 2012, IAC/InterActive reported impressive fiscal second quarter results with earnings of 66 cents per share, surpassing the Zacks Consensus Estimate by 20%.
Revenue jumped 40.2% year over year to $680.6 million, driven primarily by strong performances across most operating segments. Higher revenues and stringent cost control drove a 230 basis point operating margin expansion in the reported quarter.
InterActive also doubled its quarterly cash dividend payout to 24 cents.
Following the second quarter results, IAC/InterActive announced back-to-back acquisitions of About.com and DateHookup.com. The company spent $300.0 million in cash to buy About.com from The New York Times Company (NYT). The acquisition is expected to boost InterActives Ask.com traffic going forward.
IAC/InterActive acquired ad-backed online dating site DateHookup.com for an undisclosed amount. The acquisition expands InterActives online offerings along with its core Match.com and OkCupid.
Earnings Momentum on the Rise
Currently, the Zacks Consensus Estimate for fiscal 2013 is $2.27 per share, up 8.1% over the last 90 days. For 2014, the Zacks Consensus Estimate is pegged at $2.79, up 6.9%.
IAC/InterActive Deserves a Premium Valuation
Currently, IAC/InterActive is trading at a premium to most of its peers based on P/E and P/S. Its strong growth prospects indicate room for further significant expansion.
IAC/InterActive shares are up 28.6% year to date, compared to a 14.4% increase for the S&P 500. The stock is currently above its 50 and 200 day moving averages of 52.71 and 49.34, respectively.
Historically, share prices have shown positive correlation to earnings growth. The uptrend in the 2012 earnings estimate should encourage investors as the stock is likely to follow the trend.
New York City-based IAC/Interactive is a leading Internet company, which offers its services through more than 150 brands and products, including Match.com, Ask.com, CollegeHumor, and CityGrid Media. The company primarily focuses on four business segments that include Search & Applications (downloadable toolbars, destination websites and mobile applications), Match (online dating services), Local (local content and advertising network) and Media.
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