Why Constant Contact, Inc. Shares Crumbled

Is Constant Contact's plunge meaingful? Or just another movement?

Jan 31, 2014 at 7:45PM

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 Constant Contact, (NASDAQ:CTCT) fell 13% Friday despite fourth-quarter results and forward guidance that came out ahead of expectations. 

So what: Quarterly revenue rose 13% to $74.9 million, which translated to 76% growth in non-GAAP net income, to $0.30 per share. By contrast, analysts were only looking for earnings of $0.27 per share on sales of $74.88 million.

In addition, Constant Contact issued guidance for 2014 sales to grow "more than 13%" -- which means sales of at least $322.5 million -- with adjusted earnings of $0.96 per share. Analysts were only modeling 2014 earnings of $0.94 per share on revenue of $321.43 million.

So what gives? With the the stock going into the report priced at a lofty 90 times last year's earnings, it looks like the market was hoping for an even bigger beat.

Now what: But it's also worth keeping in mind that shares look much more reasonably priced (though still aren't particularly cheap) at roughly 23 times next year's estimated earnings. As it stands, I'm personally not intrigued enough to pick up shares here given Constant Contact's sluggish top-line growth -- after all, it can't keep growing earnings at this rapid clip forever without at some point accelerating revenue growth. At the very least, investors might be wise to add Constant Contact to their watchlists to keep tabs on its progress.

Consider the six amazing growth stocks in this free report
If Constant Contact doesn't quite whet your appetite for growth, you're in luck!

They said it couldn't be done. But David Gardner has proved them wrong, time, and time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers