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Bull of the Day: IAC/Interactive Corp. (IAC)


IAC/Interactive (IAC) is a media and internet conglomerate organized into four distinct groups: The Match Group, which consists of dating, education and fitness business brands such as Match.com, OkCupid, Tinder, The Princeton Review, and DailyBurn; Search & Applications, which includes brands like About.com, Ask.com, Dictionary.com, and Investopedia; Media, which comprises Vimeo, Electus, The Daily Beast, and CollegeHumor; and eCommerce, which includes HomeAdvisor and ShoeBuy.

This is just the tip of the iceberg of the products IAC has in its portfolio (over 150 in total), and the company boasts more than 125 million mobile apps downloaded.

Strong Q4 Results

The Zacks #1 (Strong Buy) stock reported impressive fourth quarter fiscal 2017 back in February.

Earnings of $1.40 surged past the Zacks Consensus of $1.13 per share, and adjusted net income grew 6% year-over-year.

Revenues also beat our consensus estimate and saw double-digit growth from the prior year period.

Highlights of the quarter include ANGI Homeservices revenue increasing 80% to $223.2 million and Match Group revenue growth accelerating 28% thanks to 24% growth in average subscribers; total subscribers hit over 7 million. Vimeo subscribers also saw an increase, up 14% year-over-year.

Publishing revenues jumped 44% driven in part by Premium Brands revenue growth increasing to 29%.

Earnings Outlook

For IAC, its bottom line is trending upward for the foreseeable future.

Earnings are expected to grow well over 200% for the current quarter, though one analyst has cut their outlook in this time period.

Fiscal 2018 figures are looking pretty great, with three estimates moving higher in the past two months. The Zacks consensus estimate trend has jumped from $5.78 per share to $6.00 per share.

Earnings estimates for fiscal 2019 are on the rise as well, jumping from $8.18 per share to $8.28 per share in the last 60 days.

Can Shares Push Higher?

Shares of IAC have gained about 26% since the start of the year, and 106% in the past one-year period. In comparison, the S&P 500 has lost roughly 0.76% and gained 12.5%, respectively.

The company is currently trading at a forward P/E of 26X and a PEG ratio of 3.1X.

While its industry, Internet-Commerce, currently sits in the bottom 27% of all industries ranked by Zacks—the group has lost 7.5% in the past month, no doubt feeling the effects of the tech sell-off in the last two weeks or so—it has gained over 45% in the past year.

Taking into account its impressive price appreciation over the last one-year period, as well as its expected earnings growth, IAC could be an exciting opportunity for investors looking to get in to the internet space.

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