Bull of the Day: Blucora (BCOR) – Bull of the Day

Estimates have been soaring for Blucora (BCOR) after the company delivered its 8th consecutive positive earnings surprise.

It is a Zacks Rank #1 (Strong Buy) stock.

While shares of Blucora are up substantially since the earnings report, the stock still has plenty of room to run higher considering its reasonable valuation.

Blucora owns a portfolio of Internet businesses:

• InfoSpace (74% of revenue year-to-date), which provides online search and monetization solutions,
• TaxACT (22%), which provides digital DIY tax preparation services,

and

• Monoprice (4%), which provides self-branded consumer electronics and accessories for both consumers and businesses online.

Third Quarter Results

Blucora delivered strong third quarter results on November 5. Adjusted earnings per share (which includes stock-based compensation) came in at 22 cents, crushing the Zacks Consensus Estimate of 7 cents. It was a 10% increase over the same quarter last year.

Revenue jumped 34% year-over-year to $124.1 million. This was due in part to the acquisition of Monoprice in the quarter, but the ‘Search’ segment saw 18% top-line growth.

Estimates Rising

Estimates have been soaring higher for Blucora following the Q3 beat, sending the stock to a Zacks Rank #1 (Strong Buy) stock.

The Zacks Consensus Estimate for 2013 is now $1.99, up from $1.40 just 30 days ago. The 2014 consensus is currently $2.40, up from $1.97 over the same period.

You can see the strong earnings momentum for Blucora over the last several months as it has delivered 8 straight positive earnings surprises:

Reasonable Valuation

Shares of Blucora are up more than 17% since the Q3 earnings report, but valuation still looks very reasonable. The stock recently traded around 13.7x 12-month forward earnings, well below its 10-year median of 26.7x and the industry median of 28.6x.

The Bottom Line

With excellent earnings momentum and reasonable valuation, shares of Blucora offer significant upside potential.

Todd Bunton, CFA is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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