Please ensure Javascript is enabled for purposes of website accessibility

Why Angie's List, Inc. Shares Plummeted

By Steve Symington – Feb 13, 2014 at 2:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is Angie's List's drop 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 investing thesis.

What: Shares of Angie's List (ANGI) plunged more than 17% Thursday after the company reported mixed fourth-quarter results and light forward revenue guidance.

So what: Quarterly revenue rose 49% year over year to $68.8 million, which translated to earnings of $0.05 per share. Analysts, on average, were looking for significantly higher earnings of $0.13 per share on lower sales of $68.5 million.

For the current quarter, Angie's List expects revenue of $71.5 million to $72.5 million, the midpoint of which is also below expectations for Q1 sales of $74.14 million. 

Now what: That bottom-line miss was big, but investors need to keep in mind earnings also included a $4 million accrual for pending settlement of litigation. Even without that expense, however, Angie's List still would have missed expectations with earnings of approximately $0.12 per diluted share.

That's likely why CEO Bill Oesterle optimistically weighed in, "We executed well on our strategic objectives in 2013, including making meaningful investments in our products and technology, strengthening our ability to monetize our membership through our marketplace initiatives and delivering excellent improvements in operating leverage."

However, that doesn't abate concerns first-quarter revenue is lighter than expected, and the stock doesn't look particularly cheap trading around 18.4 times next year's yet-to-be-revised earnings estimates. That's why for now, while I don't think Angie's List is a broken company, I still prefer to watch from the sidelines.

Steve Symington has no position in any stocks mentioned, and neither does The Motley Fool. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Angi Inc. Stock Quote
Angi Inc.
ANGI

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.