Shareholders won't feel the dilutive pinch, since Ancestry is entering into a $25 million share repurchase that should more than offset the 1 million freshly minted shares that are part of the deal.
This isn't the first time Ancestry.com has done right by its investors. The stock has been a winner since going public at $13.50 a share 10 months ago, beating analyst profit targets in each of its first three quarters as a public company.
The stock hits a new high this morning, currently sporting a gain of 75% since last year's IPO.
There are 1.3 million subscribers to Ancestry.com, paying an average of $18 a month to trace their roots and help others along the way. If this seems like a superfluous subscription given the free resources available, consider that Ancestry.com's subscriber count has climbed 32% over the past year.
It's had some help along the way. After a successful first season of NBC's Who Do You Think You Are?, General Electric's
Revenue climbed 36% in its latest quarter, with earnings growing even faster given its scalable model and free cash flow more than doubling.
This week's buyout of Internet Brands
Ancestry.com is a compelling investment, outside of the recent flurry of buyout activity. It may not seem cheap -- at 35 times this year's earnings and 26 times next year's projected profitability -- but the growth and niche leadership justify the markup.
Its moat may seem iffy, but that's also why it's encouraging to see deals such as iAcquire materialize. With Footnote.com as a popular American history website, iAcquire has digitized more than 65 million original source documents dating back to the Revolutionary War. Arming itself with rich documents and high-quality images makes a valuation to Ancestry.com that much more valuable.
It's a growing family, in every sense.
Would you pay to subscriber to a genealogy site? Share your answer in the comment box below.
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Longtime Fool contributor Rick Munarriz is a fan of new stocks and has even recommended several fresh IPOs to Motley Fool Rule Breakers newsletter readers in the past. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy.