Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of online financial data publisher Bankrate (RATE) plummeted 26% today after its preliminary quarterly results disappointed Wall Street.
So what: Bankrate's third-quarter outlook was so dismal -- management sees third-quarter adjusted EPS of $0.11 to $0.13 on revenue of $115.5 million to $117.5 million versus the consensus of $0.20 and $132.7 million -- that analysts have no choice but to lower their valuation estimates. Management cited continued adjustments to its insurance leads business for the miss, triggering plenty of investor doubt over its business model going forward.
Now what: Bankrate now expects full-year revenue growth of 8% to 12% from a year earlier and adjusted EBITDA margin in the high-20% range. "We will continue to execute on our strategy to move our insurance leads platform to higher quality, higher converting traffic which we believe will drive higher value and open up new product opportunities to drive growth in 2013," CEO Thomas Evans reassured investors. Of course, when you couple the uncertainty surrounding Bankrate with its still-hefty debt load, buying into that optimism isn't exactly prudent at this point.
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