The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Demand Media beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share grew.
Margins expanded across the board.
Demand Media logged revenue of $98.1 million. The 11 analysts polled by S&P Capital IQ wanted to see revenue of $94.3 million on the same basis. GAAP reported sales were 20% higher than the prior-year quarter's $81.5 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.11. The 13 earnings estimates compiled by S&P Capital IQ anticipated $0.10 per share. GAAP EPS were $0.04 for Q3 versus -$0.05 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 52.6%, 180 basis points better than the prior-year quarter. Operating margin was 4.6%, 790 basis points better than the prior-year quarter. Net margin was 3.2%, 830 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $98.0 million. On the bottom line, the average EPS estimate is $0.11.
Next year's average estimate for revenue is $368.6 million. The average EPS estimate is $0.36.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 33 members out of 66 rating the stock outperform, and 33 members rating it underperform. Among 28 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), nine give Demand Media a green thumbs-up, and 19 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Demand Media is hold, with an average price target of $12.50.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.