by James Brumley | November 5, 2013 7:44 am
RetailMeNot (SALE) is slated to report last quarter’s numbers today. If the pros are right, RetailMeNot’s adjusted earnings should come to 15 cents per share — more than the 11 cents it posted in its only other reported quarter as a publicly traded company.
Still, for some investors, the SALE earnings report — along with a reasonably thorough outlook — will be more than enough to make a buy/sell decision for RetailMeNot.
The question is, what do most would-be shareholders need to know heading into, and out of, the earnings announcement?
First and foremost, know that trading SALE stock itself is inherently a bit of a coin toss, if only because shares still are hearing the echoes of a rather well-received public debut. So, it’s still a tad premature to start treating RetailMeNot as a “normal” company.
Second, know that last quarter’s SALE earnings report still isn’t the most accurate snapshot of the company’s operation efficiency.
Just to put things in perspective, aside from the anticipated adjusted bottom line of 15 cents per share, RetailMeNot is projected to post $45.9 million in revenue for Q3. The results aren’t atypical for a startup. But startup or not, RetailMeNot is a $1.65 billion entity, and the company is going to need to ramp up the top line (as well as the bottom one) by quite a bit — and soon — if it’s going to keep investors interested enough to prop SALE stock up at its fairly lofty valuation.
It’s not out of the question, however. Future SALE earnings reports are going to be boosted by a handful of trends working in the company’s favor.
One of those forces is the combination of a tepid economy and the upcoming holiday shopping season. Early polls suggest that U.S. consumers plan to spend at least as much on gift-giving this Christmas, though the lingering economic malaise is prompting most of these shoppers to spend more efficiently. That means coupons.
Another one of the undertows prodding the growing popularity of the RetailMeNot site is its success with men. Traditionally, males have not made the bulk of a household’s spending decisions, and the few men that did shop did so with little to no planning (other than planning a trip to the mall). Now, however, men are becoming a savvy shopper demographic, looking for coupons and deals online before shelling out any dollars. RetailMeNot reports that 40% of its users are men, which might well indicate it’s striking a chord with males that was one deemed a Herculean task.
At the same time, the value of SALE stock is apt to be buoyed by the sheer fact that many consumers have yet to learn about RetailMeNot, and/or learn that it’s very much not a Groupon clone. RetailMeNot is a discount and coupon aggregation site that actually benefits all involved parties. As consumer awareness of the site grows, SALE earnings should continue to grow, which in turn means shares of SALE stock are apt to continue generating buying interest.
Investors of SALE stock should look for more details and hints of plausible growth on these fronts, as the current-quarter and 2014 outlooks show lofty growth expectations. RetailMeNot is expected to post of profit of 30 cents per share on revenue of $65.3 million for the fourth quarter of 2013, and is projected to earn 99 cents per shares in 2014 (vs. income of 88 cents per share in 2013) on revenue of $244.2 million (compared to this year’s expected top line of $195.5 million).
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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