Anyone who has purchased a certificate of deposit (CD), opened a new credit card account, or refinanced a mortgage started with the same basic question: Where can I find the best rate? Given the breadth and complexity of today's financial products, it can be daunting to objectively make comparisons within one's own hometown, let alone nationwide. Wouldn't it be convenient if there were one central source of easy-to-use aggregated information? Fortunately for the decision-making consumer, there is: Bankrate
Bankrate.com is quite simply the Internet's premier consumer banking marketplace. As one of the most frequently visited sites, Bankrate tracks and compiles information on 250 products issued by over 4,800 financial institutions in 300 markets, encompassing all 50 states. Those looking for, say, a high-yieldingmoney market fund or a low-fee checking account can peruse hundreds of options at their leisure, in search of the right product.
Over 4 million visitors per month are turning to Bankrate.com, with 30% of the traffic directed from a network of 75 partners, including Time Warner's
Skeptics might ask where revenues are generated. After all, we've seen plenty of innovative websites without any discernible means of revenue other than capricious advertising revenues. To be fair, Bankrate is reliant upon its 450 advertisers, though its base comprises traditional banking institutions such as Citibank
Operating income jumped 94% (excluding a gain from early debt extinguishment in the prior year) for 2003 to $9 million on record revenues of $36.6 million, fueled by strong growth along all business segments. Graphic ad revenues, hyperlink revenues, and print publishing and licensing revenues were up 32%, 56%, and 33%, respectively. These results were particularly impressive considering the unprecedented wave of mortgage refinancing activity that lifted 2002 sales results.
Bankrate is on track for a 10th consecutive profitable quarter. It remains debt-free, is generating consistent free cash flow, and somehow managed to improve upon gross margins already approaching 77%. Despite a staggering 250%-plus surge over the past 12 months in Bankrate shares, valuations remain reasonable. Backing out a onetime income tax credit of $3.1 million from fourth-quarter 2003, earnings per share still nearly doubled to $0.59. Based on a recent price of $16.58, the stock trades at a multiple around 28, lofty to be sure, but not inconsistent with its growth.
Last week's robust jobs report is predictably helping firms expected to benefit from an uptick in employment, such as Automatic Data Processing
Fool contributor Nathan Slaughter is currently comparing car loan rates to replace his dilapidated Mustang, but he owns none of the shares listed.