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Why RetailMeNot, Inc. Shares Shot Up

By Jeremy Bowman – Feb 6, 2014 at 3:32PM

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Is this meaningful? Or just another movement?

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 thesis.

What: Shares of RetailMeNot (SALE) were looking stronger today, gaining as much as 15% after posting a better-than-expected earnings report.

So what: The digital coupon merchant actually came up short on the bottom line as earnings per share improved from $0.03 to $0.26, but missed estimates of $0.29. Revenue, however, surged 54.5% to $78.5 million, beating expectations of $68.7 million. CEO Cotter Cunningham said earlier investments paid off in the fourth quarter "as a solid e-commerce environment and a shorter holiday season saw heavy retailer promotional activity."

Now what: Subscriber growth was also particularly strong in the quarter, increasing 106% to 17.1 million, and international sales were also up 85%, a promising sign. Expectations are high for RetailMeNot with a forward P/E of 36, but the company seems to have the momentum and leadership position in the fast-growing online coupon industry to justify the high price tag.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends RetailMeNot. 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.

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RetailMeNot Stock Quote
RetailMeNot
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