Have you ever noticed the ads that follow you from site to site? Promoting an item you looked at but didn’t buy? Criteo (CRTO), ad company based in France, makes that happen. Yes, France. Even though you probably haven’t heard of Criteo, it’s a big player in online ads. Here’s some stats:
- The company analyzed $430,000,000,000 in transactions in 2014.
- Then used that data to drive $19,000,000,000 in post-click sales in the year ending March 31, 2015.
- Serving 740 billion ads to 1.1 billion users.
- Working with 8,500 advertisers.
The company is growing fast too — sales will probably rise more than 50% this year. And it just got Target and Alibaba as new customers. This fits the mold of a stock I like to own, but there’s one negative. And its a big one. Apple is launching a pop-up blocker for its iPhones that block not only ads but tracking techniques as well. And that could hinder growth.
One Year Chart
So far CRTO has had an amazing year, with sizzling profit growth the last 4 qtrs. Stock has done well too, but you can see the hit it took when the Apple news came out in mid-June (these charts were done on August 19th).
I was looking to buy the stock when we did these charts this past Summer. And I’m glad I didn’t as the combination of the Apple ad blocker news and a rough August and September for the stock market has pushed CRTO down to $42.
Fair Value
In fact, $42 was what I thought the stock was worth this Summer. Now the stock is where it should be. The nice thing is 2016’s Fair Value is $61 which would be a gain of 45% from here.
What’s stopping me from buying the stock? The company missed analyst earnings estimates by 2 cents last qtr, after beating by 10 cents, 13 cents and 21 cents the prior three qtrs. That will take the wind out of the sails of many growth stocks. More concerning was this qtr’s estimate fell by a dine to 20 cents. Now negative profit growth is expected next qtr. Ouch.
Sharek’s Take
Criteo is an amazing company and the stock looks great. But the lowered guidance is a jolt to the stock that may also be a prelude to more lowered estimates to come, and I think that would drop the stock. So I’m going to take a wait-and-see approach with CRTO and probably won’t buy in until the company reports earnings again, which is expected between November 2nd and November 6th.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
