All Knotted Up

Looks can be deceiving on a wedding day. Matrimonial planning hub The Knot (Nasdaq: KNOT  ) posted spectacular fourth-quarter results this morning, on the surface. Revenues shot up 70% to hit $21.7 million. Profitability exploded, soaring to $0.45 per diluted share after a $0.06 per-share showing a year earlier.

Snap that picture. Now let's smear those good looks with some wedding cake in the face.

Like a budding bride, The Knot is still radiant under all of the makeup. However, as stock watchers we have to go beyond skin-deep investing. The top line soared, but a lot of that was due to the company's acquisition of The Wedding Channel back in September. Organic revenue shot up a more modest -- though clearly still respectable -- 29% for the quarter.

The bottom-line explosion also needs to be hacked away at to find the company's inner beauty. One has to back out favorable charges in the form of a $9.4 million accounting adjustment and a $1.2 million legal settlement. As it turns out, The Knot holds up reasonably well there, too. Without the charges, earnings per share would have doubled to $0.12, a penny ahead of Wall Street's expectations.

For all of 2006, The Knot showed healthy spurts across all of its business lines. Its merchandise, online advertising, and publishing units all grew their top lines by at least 20%.

That is a nicer sound than the clang of aluminum cans tied behind a newlywed couple's limo, yet the stock still opened 9% lower today on the news.

Did The Knot blow it? Not really. The stock soared 129% last year, and had tacked on another 15% advance so far this year. Marginally beating analyst profit targets sometimes isn't enough with all of that baked in helium.

However, this morning's dip offers the opportunity to study up on a company that should reap the benefits of its Wedding Channel purchase in the future. Online bridal registries are a logical fit for The Knot. It also now has another high-traffic site that it can use to lure even more wedding services providers.

Generating online leads hasn't been a universal road map to success. The Knot and financial rate provider Bankrate (Nasdaq: RATE  ) have been big winners over the past two years, yet others like Insweb (Nasdaq: INSW  ) and Autobytel (Nasdaq: ABTL  ) -- in insurance and car shopping, respectively -- have struggled.

The keys may be that The Knot is toiling away in a lucrative niche and that it is the leader in wedding planning. So feel free to wipe off the makeup. Oh, and that wedding cake too. The Knot is still a natural beauty. Go ahead. Snap that picture.

The Knot and Bankrate have been recommended to Motley Fool Rule Breakers subscribers. You can learn more about The Knot and the other newsletter market crushers with a free 30-day trial subscription.

Longtime Fool contributor Rick Munarriz got married years before TheKnot.com was around and he regrets that. He could have had a punctual person working the video camera that day. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.