May 30, 2008 - Bankrate, Inc. (RATE-NASDAQ) knows there's life after budget-cutting. The firm's Bankrate.com provides personal finance information on more than 300 products including mortgages, credit cards, money market accounts, certificates of deposit, and home equity loans. Its Interest.com publishes financial rates and information connecting consumers with lenders, and its FastFind sells consumer leads to lenders for mortgages, home-equity loans, auto financing, and online education. Bankrate also has print publications, such as its "Mortgage Guide," a weekly newspaper-advertising table consisting of product and rate information from local mortgage companies and financial institutions.

My guess is that it's not going down very far, if at all. Earnings are pouring into this small-cap company (market cap is $860 million on 16.885 million shares). Earnings per share were 56 cents in 2005, then went to 66 cents, followed by $1.05. This year analysts predict the bottom line will show $1.50 and next year $1.85.

Sales are growing even faster. In the first quarter of this year, revenues jumped over 90% from the same quarter last year. Noticeable increases showed in graphic advertising and lead generation sales as well as hyperlink revenues. Analysts see revenues up about 80% this year over last (going from $96 million to $170 million). Next year they expect $205 million.

Bankrate is expanding through acquisitions. In February of this year, it bought InsureMe for $65 million in cash plus an earnout clause that might add $20 million. The new company offers a Web site for many different types of insurance as well as a network of affiliates. Another purchase: Fee Disclosure which gives information on mortgage transactions and closing fees. Late last year, RATE bought Nationwide Card Services, a Web based marketer of credit cards. All of the transactions were for cash and no debt was used. In fact, there is no debt on the balance sheet, and cash sits at $66 million.

More numbers: Return on Equity was 9.3% last year, predictions are for 12% this year and 14% next year. Net profit margin was 21.2% last year. There is no dividend and no debt. Current assets are over 8 times current liabilities. Book Value is $11.51. Price to Earnings ratio is very high: 46.

RATE has a lot going for it. Earnings should continue to grow at a good clip, even with the economy slowing. Diversifying its revenues in the personal finance area will help balance any problems that one sector might have. But the stock has a lot of good baked into it already. Investors have bid the price to lofty levels with high expectations. If a quarter's numbers aren't delivered, the stock is vulnerable to a pullback. The stock has a beta of 1.70 which means it moved 70% more than the S&P 500 last year, both up and down. Keep that in mind as you look deeper into this one. It's volatile.

- Company Web site: www.bankrate.com

- Ted Allrich