Harte-Hanks Inc. (HHS)

[investora2z]

Harte-Hanks has corrected by 17% from the recent high of $10.12 made just before the Q2'13 earnings release. The correction has been pretty sharp as the decline has taken place over 4-5 weeks. The results were not bad as the company did better than analyst estimates. It reported a profit of 13 cents per share compared to estimates of 12 cents per share. The correction has taken the stock below crucial levels and it seems that the weakness is setting in. It is imperative that there is a strong rebound soon otherwise the outlook may worsen. The stock is still up 38% on a ytd basis. The stock has been volatile over the longer term and the movement reflects the financial performance. The revenues have gone down and the net income has been erratic. On the positive side, the company has reduced debt over the last few quarters. The dividend yield is high at around 4%. This is a strong reason for owning the stock provided the stock shows improvement in earnings consistently. If the company is able to improve its performance over the next few quarters, then the stock may do better. Perhaps it has to beat the analyst estimates by a wider margin. Basically, lack of consistent improvement in fundamentals is weighing the stock down. Competition in the sector is high, and the field is dynamic. The company has to continuously adapt to the challenges posed by various segment of advertising. Social media sponsorship / native advertising is gaining popularity with companies like IZEA (IZEA) active in the segment. The giants like Google (GOOG) & Yahoo (YHOO) are highly innovative and extremely active. Earnings for the next quarter will be important. Continued good performance will increase the confidence. Investors would like to see more consistency in performance to consider the stock for long term investment.