Tic-tac-toe, investors want to know: After beating Wall Street consensus earnings estimates in each of the last two quarters, can Bankrate (NASDAQ:RATE) make it three in a row? The clearinghouse for everything you ever wanted to know about interest rates, but hadn't a clue whom to ask, reports its Q2 2007 numbers on Thursday.

What analysts say:

  • Buy, sell, or waffle? Seventeen analysts follow Bankrate, which gets 10 buy ratings to seven holds.
  • Revenue. On average, the analysts are looking for 20% sales growth to $23.5 million.
  • Earnings. Profits are predicted to zoom 39% to $0.32 per share.

What management says:
You won't see this affect Thursday's news, but in June, Bankrate filed an 8-K with the SEC advising that it recently hiked rates for "cost-per-click" advertising. Effective July 1 (that's Q3, if you're counting), mortgage, home equity, auto loan, insurance, credit card, checking account, student loan, and credit union advertisers will be paying about 15% more for every lead Bankrate generates through its website.

Expect that to boost revenue and profits (assuming it doesn't scare too many advertisers away). And interpret it in two ways: First, it reaffirms the health of the online advertising market -- good news for investors not only in Bankrate, but also Yahoo! (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), TheStreet.com (NASDAQ:TSCM), and CNET (NASDAQ:CNET) -- pretty much anybody who has a website and posts advertising on it. Second, and more specific to Bankrate, it shows that this company feels it has enough pricing power that it can afford to hike rates by the double digits, and that its advertisers will have to pay up.

What management does:
One other consequence of the rate hike will likely be a continuation of the trends we see below. Now, I can't say for sure that margins will grow again in Thursday's news. But longer-term -- say, Q3 and beyond -- the rate hike should do good things for Bankrate's profit margins.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

74.0%

72.2%

70.2%

69.5%

70.2%

71.9%

Operating

29.2%

30.3%

31.0%

30.2%

32.2%

35.3%

Net

19.7%

17.3%

15.4%

11.9%

12.6%

15.9%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
In their most recent update on Bankrate, which came out in last May, the gang at Motley Fool Rule Breakers needled Citigroup (NYSE:C) for downgrading the stock after an all-around good first-quarter report. Citing double-digit sales growth in online publishing, graphic advertising, and hyperlink revenue, as well as in the page views that drive advertising revenue, our Rule Breaker investors argued that "the company's claim that turmoil in the housing market isn't affecting it appears to hold water."

But does our team therefore think Bankrate is a buy? Even with the stock up 46% since our most recent re-recommendation in September? Take a free, 30-day trial of Motley Fool Rule Breakers and find out.

What did we expect out of Bankrate last quarter, and what did we get? Find out in:

Fool contributor Rich Smith does not own shares of any company named above. CNET is a Rule Breakers pick. Microsoft is an Inside Value selection. Yahoo! is a Stock Advisor recommendation. You can bank on the Fool's disclosure policy.