Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online personal finance content company Bankrate
With that in mind, let's take a closer look at Bankrate's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||North Palm Beach, Fla. (1976)|
|Market Cap||$1.83 billion|
|Industry||Internet software and services|
|Trailing-12-Month Revenue||$387.7 million|
|Management||CEO Thomas Evans (since 2004)
CFO Edward DiMaria (since 2006)
|Operating Margin (Average, Past 3 Years)||11.5%|
|Cash/Debt||$64.5 million / $193.5 million|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 70% of the 27 members who have rated Bankrate believe the stock will underperform the S&P 500 going forward. These bears include Jeffrey2012 and BuffettJunior1, who is ranked in the top 5% of our community.
This past summer, Jeffrey2012 touched on Bankrate's seemingly unsustainable valuation: "This company manages to overpay for acquisitions and is very weak financially due to their significant debt load. ... I don't see how anyone would be willing to pay $1.8 billion for such a pig."
In fact, Bankrate currently sports an EV/EBITDA of 16. That represents a premium to fellow financial-information providers like Microsoft
CAPS All-Star BuffettJunior1 elaborates on the bear case:
Extremely overvalued stock. The company does not earn enough in annual free cash flow to justify a 2 billion dollar market cap. Also, it’s very stupid to value this company on its book value. This is because most of the company's assets are made up of goodwill and other intangible assets. The company's tangible book value is actually negative. A negative tangible book value is not a terrible thing; however, it just further proves my point on why this stock is overvalued.
What do you think about Bankrate, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Microsoft and Morningstar, as well as creating a bull call spread position in Microsoft. The Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days.