Wednesday, February 9, 2011

OpenTable (OPEN) Keeps the Momentum Train Going

OpenTable's (OPEN) valuation is now making Netflix (NFLX) blush [Nov 3, 2010: OpenTable is the New Netflix] - based on last night's earnings, OPEN just completed 2010 with a 85 cent EPS year; using last night's quote of $85 the math is pretty simple to figure out the trailing EPS.  Even more impressive the market is giving this name a $2B valuation for $100M in sales - that's 20x revenue.  Whew!

Looking ahead a year, 2011 estimates are currently $1.12; I will assume there is a premium to that figure closer to $1.40.  This will give a forward P/E (far into the future) of about 60.  But in a market that can only go up, much like in 1999, valuation is really an only a concept and not a reality; we can pay any valuation for any company because tomorrow someone will show up to pay more.  So to answer our question from September (which can now apply to any stock in the world - not just Netflix) [Sep 16, 2010: Does One Dare Short OpenTable?] The Bernank says no.

OpenTable beat estimates of 22 cents by 11 cents, while revenue of $30.8M barely surpassed estimates of $30.2.  Obviously analysts did a poor job of modeling the business if they nailed revenue so closely but did not figure out the rest of the income statement.  Full report here. As always with the momo stocks, the party continues to rock until a brick wall is hit.  I will be interested to see what happens in 90 days if management's guidance is accurate, as decelerating revenue growth is not something momo traders like.
  • OpenTable management declined to provide revenue and earnings guidance, but said that it expects Q1 will be a “strong quarter of seated diners” but that year-over-year revenue growth is unlikely to be as strong as in Q4, given that the year-ago Q1 was particularly strong, and given inclement weather.

Via AP:

  • OpenTable Inc. said Tuesday that its fourth-quarter net income grew 65 percent as more diners used its free service to book restaurant reservations and more restaurants signed up for its electronic booking system.
  • In the last three months of 2010, the company posted net income of $5.1 million, or 21 cents per share, up from $3.1 million, or 13 cents per share, in the same period in 2009.  Excluding one-time charges for acquisitions, stock options for employees and other expenses, OpenTable said it earned $8 million, or 33 cents per share. Analysts polled by FactSet had expected earnings of 22 cents per share.
  • Revenue in the same period rose 61 percent to $30.8 million from $19.2 million. Analysts had expected $30.3 million.
  • The company said its operating expenses rose 68 percent to $25.4 million, mostly because it hired more employees. The company's work force grew 55 percent.
  • The company went public in May 2009 at $20 per share; the stock has risen more than fourfold since then.
  • OpenTable makes money from the monthly fees that subscribing restaurants pay for its service. It also receives a fee for each meal reservation that ends with a diner paying a bill at the appointed restaurant.
  • The company said 13,795 restaurants in North America are signed up for its services, 27 percent more than a year earlier. The number of diners who used to make a reservation and then ate at the restaurant grew 51 percent to 17.8 million
  • The company's international division -- which is about half the size -- grew faster, and the number of diners making reservations on their smart phones jumped 189 percent.
  • For the year, OpenTable's net income nearly tripled to $14.1 million, or 58 cents per share, from $5.1 million, or 22 cents per share, in 2009. Revenue grew 44 percent to $99 million from $68.6 million.

OpenTable is a leading provider of free, real-time online restaurant reservations for diners and reservation and guest management solutions for restaurants. The OpenTable network delivers the convenience of online restaurant reservations to diners and the operational benefits of a computerized reservation book to restaurants. 

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