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 LogMeIn (LOGM) are up over 12% today after narrowly besting analysts' expectations for its third-quarter adjusted earnings. Full-year adjusted earnings guidance also came in ahead of the consensus estimate.
So what: LogMeIn's third-quarter results were $35.4 million in revenue and $0.03 in earnings per share on a GAAP basis. Non-GAAP earnings were $0.18 per share, which bested analysts' EPS consensus of $0.16. Revenue expectations, at $35.1 million, were pretty much in line with the final result. Full-year guidance is now $138.3 million to $138.7 million on the top line and $0.66 to $0.67 in earnings per share. Revenue, again, is about in line with the analyst consensus, but the new guidance is $0.02 to $0.03 higher than what was expected.
Now what: Although LogMeIn heads into the fourth quarter with $205.2 million in the bank, its P/E is quite high after the pop, pushing triple digits on Yahoo! Finance and well beyond triple digits on both Google Finance and Morningstar. The company's free cash flow has held up much better than its net income, and currently presents an implied price to free cash flow valuation that's at least five times smaller than Yahoo! Finance's P/E, but there's been little change in cash flow levels since 2011. LogMeIn seems to be on the right track, but it's got a ways to go in order to prove that this pop is more than just a short-term overreaction.
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