Don't let anyone sell you on Bankrate
Thanks to the popularity of high-yielding investments, Bankrate scored another monster quarter. For the December period, Bankrate saw revenues catapult 49% higher to hit $20.7 million. Earnings per share improved to $0.21 a share, or $0.27 a share on an adjusted basis. Analysts were only expecting the adjusted profitability to clock in at $0.24 a share.
So what's the secret sauce? Well, personal finance is pretty big these days. Just last month, Yahoo!
Bankrate is parked at the sweet spot. By perpetually polling more than 4,800 financial institutions, the site has become a popular source for rate comparison shopping. Whether it's for a home equity line, a CD, or saving for college, Bankrate has the rates and the syndicated content to make sure you don't forget that it has those rates.
The company recorded 120.6 million page views this past quarter. That was a 24% improvement over last year's showing. So why are revenues and profits growing faster than that? Great question. The answer has everything to do with the allure of Bankrate as an investment.
Financial companies are paying more to get noticed. These are competitive times, and Bankrate is one way to make sure that you don't get lost in the crowd. One of the site's most popular services for financial institutions is for firms to pay to have a hyperlink inserted when they show up in a rate request search. Users can still sort by rate, but it's a lot easier to be found when a hyperlink will take you right to the financial institution's site.
For instance, I just checked for 15-year mortgages in my area, and all but two of the results had paid for links and adjacent advertiser comments. One of the banks not paying up for a hyperlink was Wachovia
Well, despite the 24% spurt in page views, hyperlink revenue shot up 62% for the quarter. It now makes up 36% of the company's revenue mix.
Between Bankrate making more off each page it serves and wider gross and EBITDA margins to make each buck more lucrative, it's not much of a surprise to find that Bankrate has been recommended -- twice -- to Rule Breakers newsletter subscribers.
Yes, Bankrate knows all about interest rates. Now it's time for the market to show a little more interest in Bankrate.
Yahoo! is a Stock Advisor recommendation.
Longtime Fool contributor Rick Munarriz has used Bankrate's site plenty in the past, but he does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.