Why Constant Contact Shares Popped

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 digital marketing company Constant Contact (NASDAQ: CTCT  ) climbed 10% today after its quarterly results and outlook topped Wall Street expectations. 

So what: The stock has been on fire over the past three months on signs of improving demand, and today's second-quarter results -- EPS of $0.12 beat Wall Street by $0.02 while revenue jumped 13% -- coupled with upbeat full-year guidance only reinforce those positive growth vibes. In fact, adjusted operating margins during the quarter expanded 60 basis points over the year-ago period, suggesting that Constant Contact's competitive position strengthening, as well.  

Now what: Management now sees adjusted EPS of $0.68-$0.73 on revenue of $285 million-$288 million, up from its prior view of $0.66-$0.71 and revenue of $284 million-$289 million. "I am pleased with the performance of our core business and excited about our progress toward delivering a robust suite of integrated online marketing tools for small businesses," said CEO Gail Goodman. Of course, with the stock now up about 35% over the past three months alone and trading at a 20-plus forward P/E, I'd wait for some of the excitement to fade before buying into that bullishness.

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