Blucora Inc. - Aggressive Growth

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Blucora Inc. ( BCOR ) has watched earnings momentum for this year jump by more than 100% over the past 90 days, as this provider of online search and tax preparation software has strung together three straight positive earnings surprises. Most recently, it beat by more than 240% in the second quarter of 2012. It will report again in the first week of November. This Zacks #1 Rank (Strong Buy) also has a long-term projected growth rate of 20%, which makes it a solid growth pick.

Strong Second Quarter

On July 26, Blucora reported that second quarter earnings surged 200% year over year to 48 cents per share, exceeding the Zacks Consensus Estimate by 242.9%.

Revenue jumped 85.8% from the comparable year-ago quarter to $100.9 million, topping the Zacks Consensus Estimate of $95.0 million. The better-than-expected growth was driven by a solid performance from search (up 51% year over year). Tax preparation revenues were $19.1 million in the quarter.

The strong second quarter results encouraged Blucora to provide a positive guidance for the third quarter of 2012, which should be announced November 7. Revenue is expected between $90.0 million and $93.0 million, and non-GAAP earnings are expected at 19 cents to 23 cents per share.

Earnings Estimates Move Higher

For 2012, the Zacks Consensus Estimate jumped 110.5% to 80 cents over the last 90 days, reflecting year-over-year earnings growth of 65.6%.

For 2013, the Zacks Consensus Estimate soared 56.5% to $1.08 in the same time, reflecting 35.4% earnings growth.

Reasonable Valuation

Currently, Blucora is trading at a slight premium to most of its peers on a forward P/E basis. However, its strong earnings growth expectation of 20.0% over the next five years compares favorably with the industry average of 17.5%, indicating room for further expansion. Moreover, its PEG ratio of 1.1 is lower than the industry average of 1.5.

Historically, share prices have shown a positive correlation to earnings growth. The uptrend in 2012 earnings estimates should encourage investors as the stock is likely to follow the trend.

Founded in 1966, Blucora changed its name from Infospace Inc. in June 2012. Headquartered in Bellevue, Washington, Blucora provides web search tools through its websites namely Dogpile.com, WebCrawler.com, MetaCrawler.com, and WebFetch.com. Blucora also provides online tax preparation services through the acquisition of TaxACT Holdings in January 2012. The company has a market capital of $712.8 million.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

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