CSI Update: United Online May 1st 2014

UNTD announced Q1 2014 earnings after the close on April 30th. Revenues were $55.4 million down 3% from $57.2 million last year. GAAP net loss was $.75 a share, compared to income of $.03 per share last year. OIBDA (operating income before depreciation and amortization-the term United uses, which is essentially EBITDA) was $3.2 million compared to $5.2 million last year. Overall an OK quarter. Our valuation rose to $32.35 from $27.86 last quarter. UNTD is trading at about 40% of our valuation and cash is 40% of the market cap ($4.79 a share versus $4.29 a share last quarter. Although it looks like the stock will fall this morning (it was up $.78 yesterday), we think this is a buying opportunity.

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CSI Tip: BUY UNTD @ $10.28

United OnlineĀ  Inc. (NASDAQ–UNTD)

Valuation-$$27.86
Price December March 12, 2014-$10.28

I planned to recommend UNTD a while ago. I purchased some for $9.57 a share, and then it went straight up to $15.88 on February 20th this year on a good revenue quarter. We sold half our position. But now it has come almost all the way back down and given that it is trading at 40% of our valuation, we think it is time to buy more. The last time we saw a company like this was AOL in the mid-teens. Everyone thought AOL was dead. Now it is over $40 a share. UNTD is also one of the remaining early internet pioneers with brands like Classmates, NetZero and Juno.

Trading at only 37% of our valuation and with 50% of its market cap in cash ($5.06 a share) we think this is a BUY.

Their latest quarterly results were the first ones since UNTD spun off FTD last year, but they were still impacted on the expense side by spin-off costs. Revenues were $62.6 million (which drove the stock to its high) and after adjusting for litigation, transaction, share based compensation, intangible amortization, depreciation etc. they made $12.6 million. For 2014 they are projecting OIBDA of $28-$34 million.
There are about 14 million shares outstanding and it trades about 600,000 shares a day.
About UNTD:

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