Why Web.com Shares Hosted Big Gains

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Web.com (NASDAQ: WWWW  ) rose more than 10% this morning -- and are still up around a 9% gain -- after the company surprised the Street with better-than-expected quarterly results and solid guidance for the rest of 2013.

So what: Web.com reported $128.1 million in adjusted revenue and $0.48 in earnings per share, against consensus expectations of $127.7 million on the top line and $0.45 in EPS. The company is also projecting that it will generate between $130 million and $131 million in adjusted revenue, which is in line with the consensus of $130.5 million, and adjusted EPS in the range of $0.48 to $0.49, which slightly exceeds the $0.48 consensus.

Full-year revenue projections of $526 million to $533 million hit Wall Street's $529.6 million consensus in the middle, but full-year EPS projections in the $2.00 to $2.05 range are better than the $1.99 Street consensus. The EPS guidance seems to be a major cause for the pop, as it's the clearest indication of positive momentum out of this report.

Now what: Web.com would be valued at a P/E of 9.7 on an adjusted basis, but it remains unprofitable in GAAP terms. The company's cash flow does remain positive, but its debt load remains extremely high -- it's a full three-quarters the size of Web.com's market cap -- and that could cause big problems down the road if debt terms take a turn for the worse, or if growth happens to stall out.

Want more news and updates? Add Web.com to your watchlist now.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2407456, ~/Articles/ArticleHandler.aspx, 9/22/2014 4:13:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement