Life is good at ValueClick
Cynics would note that top-line growth decelerated from its headier growth earlier in the year, but that's not a fair shot. Through the first three quarters of 2006, ValueClick was propped up courtesy of its acquisitive ways a year earlier. It snapped up E-Babylon, Webclients, and Fastclick in 2005, but all deals closed before the start of the fourth quarter. In other words, this is the first organic year-over-year comparison that we're getting out of ValueClick in some time.
OK, ValueClick did acquire Shopping.net this past December, but it's a small deal that didn't exactly move the needle.
ValueClick has collected a wide portfolio of Internet marketing companies that webmasters know and love. Beyond its namesake online-advertising company, ValueClick also owns comparison-shopping site Price Runner, and affiliate marketing provider Commission Junction.
The future is only going to get better. ValueClick is looking for revenue in 2007 to climb 18% to 22% higher. Margins will improve, leading to bottom-line improvement of 26% to 29% over last year's earnings.
With ValueClick looking to earn between $0.78 a share to $0.80 a share this fiscal year, the stock appears pricey at 36 times forward earnings. Tack on an extra $0.11 per share if you back out stock-based compensation, and it still doesn't feel like a screaming bargain at 31 times earnings.
However, did you catch last quarter's growth and its spectacular outlook for earnings growth this year? More importantly, the company's guidance is conservative. It has blown past its projections -- by $0.03 per share or better -- in each of the last three quarters.
Online advertising will continue to grow. Companies like aQuantive, 24/7 Real Media
ValueClick will empower webmasters and sponsors, but it will be its investors who are positioned to truly be enriched.
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Longtime Fool contributor Rick Munarriz is a fan of online advertising and has had a Commission Junction account since the 1990s. He does not own shares in any of the companies 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.