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Bankrate (RATE) Drops After Guiding 3Q Below Street

 October 15, 2012 04:30 PM

(By Balaseshan) Bankrate Inc. (NYSE:RATE) shares plunged 21.03% in aftermarket trading on Monday after the personal finance content publisher guided third quarter below Street's view and lowered full year revenue growth estimate.

The company expects third quarter adjusted earnings per share (EPS) of $0.11 to $0.13 and revenue of $115.5 million to $117.5 million. The earnings guidance is much lower than last year's reported adjusted EPS of $0.18, while revenue forecast exceeded previous year's reported revenue of $112.9 million.

Analysts, on average, polled by Thomson Reuters anticipate earnings of $0.20 per share on revenue of $132.74 million for the third quarter.

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"Although credit card traffic remains strong, we have seen no change or improvement in approvals. The core Bankrate mortgage and deposit business has been very strong in Q3 and for the year," said Thomas Evans, President and CEO of Bankrate.

Adjusted earnings before interest, taxes, depreciation, and amortization, excluding share-based compensation expense and IPO and deal related expenses (Adjusted EBITDA), are expected to be between $28.5 and $30 million in the third quarter of 2012, compared to $36.0 million in the third quarter of 2011.

For the full year 2012, the company now projects revenue growth of 8% to 12% and the Adjusted EBITDA margin to be in the high 20% range. Street analysts predict 21.50% revenue growth for the full year.

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Previously, the company had expected revenue growth in the low to mid- 20% range and EBITDA margins in the low 30% range.

The company said the additional adjustments Bankrate has made in its insurance leads business to aggressively cut back on sources to drive higher conversion and quality has resulted in a short term reduction to its results and guidance.

"We will continue to execute on our strategy to move our insurance leads platform to higher quality, higher converting traffic which we believe will drive higher value and open up new product opportunities to drive growth in 2013," said Evans.

RATE closed Monday's regular session down 1.16% at $14.50. The stock has been trading between $13.93 and $25.95 for the past 52 weeks.



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