Why LifeLock Shares Popped
Oct 30th 2013 6:09PM
Updated Oct 30th 2013 6:10PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of LifeLock rose more than 15% Wednesday after the identity-theft protection specialist reported better-than-expected third quarter earnings and strong forward guidance.
So what: Quarterly revenue rose 33% to $95.7 million, which translated to adjusted net income of $11.4 million, or $0.12 per diluted share. By contrast, analysts were looking for adjusted earnings of just $0.10 per share on lower sales of $93.29 million.
In addition, LifeLock provided solid fourth-quarter 2013 guidance for revenue in the range of $99 million to $101 million, and adjusted net income per share of $0.21 to $0.22. The midpoint of both ranges handily exceeded average estimates, which called for Q4 sales of $98.56 million and adjusted net income of $0.21 per share.
Now what: LifeLock's services are obviously resonating with consumers who have become increasingly leery of identity theft in recent years. I suppose it should come as no surprise, then, that LifeLock was only founded in 2005 and held its initial public offering at $9.00 per share just over one year ago.
Shares have risen more than 75% since then, and today's strong report is a great indication of the validity of LifeLock's business. However, given the company's growth potential, it's worth noting the stock does trade at a premium at nearly 32 times next year's estimated earnings. Going forward, then, while I wouldn't be surprised if shares continue to rise from here, prospective investors would be wise to keep an eye on LifeLock's bottom line to be sure it continues to rise over the long-term along with revenue.
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