Match.com (NASDAQ:MTCH) stock has been on a good run since merging with rival dating app Tinder in 2017. From $18 then, it’s been flirting with a breakout above $59 for much of the year.
While Wall Street had fallen out of love with the company heading into its fourth-quarter earnings report back in February, that spark was quickly rekindled after MTCH reported results that beat the Street view on the top and bottom lines.
Earnings surged to $116 million, or $0.39 per share, up from a loss of $9 million, or a $0.03 per share loss, in the same quarter a year ago. Adjusted earnings per share doubled to $0.39, up from $0.18 per share, and topped analysts’ estimates for $0.38 per share by 2.6%. Fourth-quarter revenue came in at $457 million, also beating estimates for $448.43 million.
The stock hit a new 52-week high of $60.91 following the report, and while it’s been stuck trading just below $60 since mid-February, I expect its upcoming first-quarter earnings report (due out in early May) to get the shares firing on all cylinders and breakout to new records again.
There are a couple of reasons why I expect this. First, we have this past Valentine’s Day – and Match.com did stoke those flames with a 25% off promotion.
There’s also the first Sunday in January to consider. These apps tend to enjoy strong traffic on Sundays. And that particular one comes just after the holidays…right when folks begin working on their New Year’s Resolutions…and with enough time to find a potential Valentine.
But that surge really begins just before Christmas — during the fourth quarter. So, looking back at those figures can be instructive now.
Last quarter, Match Group reported that Tinder results drove better-than-expected fourth-quarter results. The company’s Tinder app added 233,000 new paying members during the quarter, which brings Tinder’s total subscriber base to 4.3 million. And as I mentioned, it turned a profit during the fourth quarter, too.
Looking ahead, Match Group expects first-quarter revenue between $455 million and $465 million. That represents 11.7% to 14.1% annual revenue growth. The forecast is slightly lower than the current consensus estimate, which calls for revenue of $469.6 million.
All of this sets the company up nicely for another positive surprise.
But earnings surprises are only a part of the story. To determine if Match Group is a stock to buy right now, we need to assess several other factors. And my Portfolio Grader lays that all out nicely for us — so let’s take a look now.
Portfolio Grader gives MTCH stock a middling grade of “C” on its Fundamentals, as you can see below:
While Match Group had decent earnings growth, momentum and surprises, and strong sales growth, its score was dragged down by cash flow that Portfolio Grader found to be subpar.
And yet, it receives a “B” rating, which makes it a buy. This is because of its strong Quantitative Score, where earns a “B.”
The Quantitative Score I’ve built into Portfolio Grader reflects my strong conviction that money flow is the best indicator of a successful investment. As goes the “smart money” on Wall Street, so goes the stock. And what Portfolio Grader is indicating to us here is that MTCH stock is enjoying positive momentum.
Now, I do want to note that this does come with some volatility. For instance, after Match Group’s last earnings report, shares fell 4% on the day after news that Deutsche Bank (NYSE:DB) dropped its analyst rating on MTCH stock. And then shares promptly ramped higher as everyone realized that the results themselves were better than expected, thanks to Tinder, as we just talked about.
But with strong institutional buying pressure and decent fundamentals to boot, MTCH stock earned a place on my Breakthrough Stocks Buy List.
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Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.