OpenTable (OPEN) Keeps the Momentum Train Going

OpenTable’s (OPEN) valuation is now making Netflix (NFLX) blush – based on last night’s earnings, OPEN just completed 2010 with a 85 cent EPS year; using last night’s quote of $85 the math is pretty simple to figure out the trailing EPS.  Even more impressive the market is giving this name a $2B valuation for $100M in sales – that’s 20x revenue.  Whew!

Looking ahead a year, 2011 estimates are currently $1.12; I will assume there is a premium to that figure closer to $1.40.  This will give a forward P/E (far into the future) of about 60.  But in a market that can only go up, much like in 1999, valuation is really an only a concept and not a reality; we can pay any valuation for any company because tomorrow someone will show up to pay more.  So to answer our question from September (which can now apply to any stock in the world – not just Netflix)  The Bernank says no.

OpenTable beat estimates of 22 cents by 11 cents, while revenue of $30.8M barely surpassed estimates of $30.2.  Obviously analysts did a poor job of modeling the business if they nailed revenue so closely but did not figure out the rest of the income statement.  Full report here. As always with the momo stocks, the party continues to rock until a brick wall is hit.  I will be interested to see what happens in 90 days if management’s guidance is accurate, as decelerating revenue growth is not something momo traders like.

  • OpenTable management declined to provide revenue and earnings guidance, but said that it expects Q1 will be a “strong quarter of seated diners” but that year-over-year revenue growth is unlikely to be as strong as in Q4, given that the year-ago Q1 was particularly strong, and given inclement weather.

OpenTable is a leading provider of free, real-time online restaurant reservations for diners and reservation and guest management solutions for restaurants. The OpenTable network delivers the convenience of online restaurant reservations to diners and the operational benefits of a computerized reservation book to restaurants.

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About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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