OpenTable (OPEN) hit an all-time high of $96 on Valentines Day. Todays is March 10th, we’ve been in a poor market for two weeks, and the stock is $89. That’s what you call holding up well.
One Year Chart
You would think with a P/E of 82 this stock would be one to crash during a correction, but that hasn’t been the case.
There’s lots of people shoring the stock, doing so might not be a good idea. Profits have grown in the triple-digits the past four quarters. That has to be respected.
Earnings Table
The biggest reason not to bet against this stock is the company just whipped earnings estimates. OpenTable beat buy 12 cents last quarter. This was announced February 8th, and the stock went to all-time highs on the 14th so something must have been good.
OPEN is all-about the 60’s. Revenue growth grew 61% last quarter and more importantly the restaurant base (OpenTable’s bear-and-butter) jumped 62%. Seeted diners grew 59% overall — 51% in North America and 352% internationally. International customers, that really open’s your eyes to the long-term growth opportunity.
The negative about this earnings table is profit estimates didn’t rise this quarter. The top stocks usually boost estimates a lot. Here, 2011 estimates rose only a penny and 2012’s a dime.
Of course the big knock on OpenTable is there’s no barriers to entry, so Groupon could do it cheaper.
Fair Value
So yes the stock’s high, but if it got resopnable I would love to buy it. I think the best way to look at OPEN is to think about what the company should earn in 2012 we can spend 2012 trying to buy it.
The wish I have is for OPEN to dip to $67 and then I can buy it and wait until 2012 rolls around. If the stock’s stays around that price and estimates don’t change then we’d be holding one of the worlds fastest growing companies with a P/E of 40. That sounds good to me.
