We're far past the boom days of the Internet when revenues were growing by multiples instead of single- or double-digit percentages. As competition becomes more fierce and growth is harder to come by, it's important to see consistent sales and improving margins in a maturing business. Three of ValueClick's four business segments had improved margins in the most recent quarter, highlighted by Affiliate Marketing, which improved operating margins to 53.1% from 47.1 % last year. The only group that didn't improve was Owned & Operated Websites, which lost a major customer impacting second-quarter revenue by an estimated $11 million.
Internet trends may also be working in ValueClick's favor. One analyst who just upgraded the stock thinks Google's Instant Search will be a growth driver for ValueClick, saying, "We believe affiliate marketers may experience a surge in traffic and sales."
To top it off, ValueClick has a solid business, improving margins, and a 15.4 price-to-earnings ratio, which is cheap relative to Web developer Digital River's
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Fool contributor Travis Hoium does not have a position in any stock mentioned here. Google is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers choice. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.