Shares of the online financial rate information provider,
, plunged nearly 5% in yesterday's after-hour trading session
following the company's request to delay 10-K filling with the U.S.
Securities and Exchange Commission (SEC).
The company has been in troubled waters since Sep 15, 2014 when
the SEC launched a probe into its financial reporting for the
second and third quarters of 2012. The investigation committee is
mainly examining three accruals of revenues totaling $781,000 and
two adjustments totaling $850,000 made to reduce accrued
Following the SEC probe, the then chief financial officer (CFO),
Edward J. DiMaria, stepped down. However, he still holds the
position of senior vice president of the company.
Several law firms including Levi & Korsinsky, LLP and
Robbins Arroyo LLP are also investigating the company's board
members to find out if they violated any fiduciary duty.
Taking stock the ongoing SEC probe, Bankrate's audit committee
in Sep 2014 decided that the financial statements issued for 2011,
2012 and 2013 should not be relied upon until the probe is
Moreover, Bankrate has not announced the financial results for
the third and fourth quarters or full-year 2014. However, in its
last business update issued on Nov 6, 2014, the company provided
preliminary selected third-quarter 2014 results. The company had
posted adjusted revenues of $141.8 million and adjusted earnings of
15 cents per share for the third quarter.
The ongoing SEC investigation and the delay in 10-K filing
indicate that there might be quite a few loopholes in the company's
financials, in our view. Apart from this, the situation raises
questions about management's capabilities.
Going forward, even if the company overcomes the SEC probe, it
will not be easy for it to remain on the growth path due to loss of
investors' and customers' faith and stiff competition. The company
competes with various financial institutions as well as several
websites dedicated to specific personal finance products and lead
Currently, Bankrate carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the Internet content space are Everyday
, Taomee Holdings Ltd.
and Tucows Inc.
. All these stocks carry a Zacks Rank #2 (Buy).
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