As one of the least conspicuous online real estate aggregators in recent years, Barry Diller's IAC/InterActiveCorp
IAC posted earnings of $0.09 a share -- or $0.22 a share on an adjusted basis -- as revenues climbed by 16% to hit $1.65 billion. The company, in the process of shelling out $1.85 billion for AskJeeves.com
They might appear to be peculiarly shaped puzzle pieces, but they all do fit together. After all, someone trying to explore a city's hotspots at Citysearch may also be interested in going through Ticketmaster to buy some event passes and booking travel through Hotwire, Hotels.com or Expedia. If she has such a great time in the new city that she wants to move there, she could turn to RealEstate.com, Lending Tree and HSN.com to find, finance and furnish her new home.
But the market hasn't exactly grasped that concept, and IAC's stock has been cut in half since peaking in the summer of 2003. IAC believes in itself, enough to put its money where its mouth is by diverting some of its $4.2 billion cash reserve toward share buybacks. The more you look, the more likely it is that you will believe in IAC as well.
Just like CNET
As long as it still smells like an opportunity, does it really matter? While the spinoff will pose the interesting challenge of which appendage to root for (Expedia is growing faster, but there's a lot of good stuff staying with the flagship company), IAC is still an entity that appears undervalued at a little more than 20 times this year's profit targets.
Pity Wall Street. It only pays up when the puzzles come pre-assembled.
Some more related stores:
- Jeeves did in fact retire a billionaire.
- Some wonder if IAC is overpaying for Ask Jeeves.
- IAC is ultimately a cheap stock with plenty of free cash flow.
Longtime Fool contributor Rick Munarriz does not own shares in any of the companies mentioned in this story though he has been a frequent freelance contributor to IAC's Citysearch.com site. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.