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Tickers in this Article: BCOR
Estimates have been soaring for Blucora (BCOR) after the company delivered its 8th consecutive positive earnings surprise.It is a Zacks Rank #1 (Strong Buy) stock.While shares of Blucora are up substantially since the earnings report, the stock still has plenty of room to run higher considering its reasonable valuation.Blucora owns a portfolio of Internet businesses:
  • InfoSpace (74% of revenue year-to-date), which provides online search and monetization solutions,
  • TaxACT (22%), which provides digital DIY tax preparation services,
  • and
  • Monoprice (4%), which provides self-branded consumer electronics and accessories for both consumers and businesses online.
Third Quarter ResultsBlucora delivered strong third quarter results on November 5. Adjusted earnings per share (which includes stock-based compensation) came in at 22 cents, crushing the Zacks Consensus Estimate of 7 cents. It was a 10% increase over the same quarter last year.Revenue jumped 34% year-over-year to $124.1 million. This was due in part to the acquisition of Monoprice in the quarter, but the 'Search' segment saw 18% top-line growth.Estimates RisingEstimates have been soaring higher for Blucora following the Q3 beat, sending the stock to a Zacks Rank #1 (Strong Buy) stock.The Zacks Consensus Estimate for 2013 is now $1.99, up from $1.40 just 30 days ago. The 2014 consensus is currently $2.40, up from $1.97 over the same period.You can see the strong earnings momentum for Blucora over the last several months as it has delivered 8 straight positive earnings surprises:Reasonable ValuationShares of Blucora are up more than 17% since the Q3 earnings report, but valuation still looks very reasonable. The stock recently traded around 13.7x 12-month forward earnings, well below its 10-year median of 26.7x and the industry median of 28.6x.The Bottom LineWith excellent earnings momentum and reasonable valuation, shares of Blucora offer significant upside potential.Todd Bunton, CFA is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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