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Better than expected results did not do much

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investora2z   Friday, 08/16/13 06:51:37 AM
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Better than expected results did not do much for the stock. It has corrected from the 52 week high made close to the earnings, and is now looking relatively weak. It needs to rebound quickly to regain momentum. Despite the correction, the stock is still up by more than 80% from the 52 week low, and has appreciated 50% in 2013. The EPS for Q2 came in at $0.13 which was better than the consensus estimate of $0.12. Even the revenues came in better than estimates. The diluted earnings for Q2'13 compared well with the diluted loss per share $1.66 in Q2'12. However, in Q2'12, the company had taken a $157 million impairment hit related to goodwill of its Shoppers business. The stock has remained volatile over the longer term on the back of declining revenues and erratic performance as far as the bottom-line is concerned. The good part is that it has reduced its debt over the years from $270 million in 2009 to $110 million in 2012. The interest payments have reduced significantly, reducing the pressure on net margins. Reaction to the earnings indicates that a lot more work may be required to take the stock higher. The recent appreciation in the stock has factored a lot of the positives, and some major positive surprises will be required for it to cross the recent highs. However, future growth is not easy as the company is likely to face more competition from companies operating in different segments of the advertising industry. Online advertising, especially emerging concepts like social media sponsorship are likely to provide competition. IZEA (IZEA), a company in social media sponsorship / native advertising industry reported record Q2'13 results a few days ago. HHS has to be more dynamic, and adapt to the changing marketplace to maintain its competitive advantage.

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