At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we'll be tracking the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
My wife (not a native English speaker) once told me a story, perhaps apocryphal, about how she and a friend taught a third friend to navigate an entire two-week vacation in Turkey on just three words of English:

  • "Oops."
  • "Uh-oh."
  • "Wow."

Turns out, these phrases work just as well to describe the reaction of Bankrate (NASDAQ:RATE) investors to today's 13% implosion. Oops, CIBC World Markets just downgraded our stock. Uh-oh, so did RBC Capital Markets! Wow -- look at that stock fall!

More's the pity, because only a week ago today, Bankrate was reporting gangbuster earnings. Bucking the trend at rival online banking sites like IAC/InterActiveCorp's (NASDAQ:IACI) Lending Tree or Popular's (NASDAQ:BPOP) E-Loan, Bankrate quadrupled its profit in the fiscal third quarter. Against such a backdrop, what could have inspired two of Wall Street's finest to incite a run on Bankrate? In a word: insider selling.

OK, two words, which seemed to lead the analysts to two different conclusions. RBC says that the trade of 1.2 million shares, including 600,000 shares to be unloaded by the chairman, makes Bankrate a "sector performer." CIBC, which had also speculated that the company would be bought out, now rates Bankrate a "sector underperformer," reasoning that the chairman wouldn't be selling 13% of his shares now if he were expecting to sell the whole lot of them for a premium later.

Logical. But are the analysts right on this one? For clues to their skill at reading the Form 4 tea leaves ...

Let's go to the tape
CIBC somehow continues to fly below the CAPS radar, and we have no idea how good of a record it's got. But RBC? That one we've been tracking for a good long while. And for a good reason, too: RBC's got a great record picking stocks, reflected in its CAPS rating of nearly 93. A couple of its better calls in the dot-com space include:

Company

RBC Said:

CAPS Says:

RBC Pick Beating S&P by:

Sohu (NASDAQ:SOHU)

Outperform

***

115 points

Verisign (NASDAQ:VRSN)

Outperform

***

42 points

While it's certainly not right all of the time (only 54% of the time), RBC's mistakes tend to crop up in other industries. Restaurants, for example:

Company

RBC Said:

CAPS Says:

RBC Pick Lagging S&P by:

Starbucks (NASDAQ:SBUX)

Outperform

***

42 points

Texas Roadhouse (NASDAQ:TXRH)

Outperform

****

14 points

Foolish takeaway
CIBC and RBC may be disappointed by the lowered chance of Bankrate's sale, but personally, I tend to buy stocks less on the speculation of a buyout (and sell them less on the disappointment that a buyout won't happen), and more on the company's valuation. You know: "Buy cheap, sell pricey."

From this perspective, Bankrate is a stock that looks pricey at first glance, but not at all so on a second look. Although it carries a 43 P/E (even after today's sell-off), the firm generates free cash flow far exceeding that "E." Net earnings, which totaled $19.9 million over the last 12 months, don't hold a candle to the $28.9 million in cash profits Bankrate generated during that same period. And when measured against these cash profits, the firm sports a much more palatable price-to-free cash flow ratio of just 28.

With profits growth predicted to average 28% per year over the next half-decade, that price seems more than fair to me, so I'd be a buyer at these levels. In fact, just as soon as I post this piece, I'm going to head on over to CAPS to "virtually" buy it right now. Join me if you dare.

Looking for a second opinion on Bankrate? (Or in this case, a fourth?) The company is a pick at Motley Fool Rule Breakers. Try out the service for one month to find out why.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 2,281 out of more than 73,000 players. Starbucks is a recommendation of Motley Fool Stock Advisor. Popular is an Income Investor pick. The Fool has a disclosure policy.