InfoSpace Authorizes $100 Million Buyback

Evidently the board of InfoSpace (INSP) sees the same type of value in its stock that I do. The company has announced it will buyback up to $100 million of its shares in the open market. With a $1 billion market value, this represents 10% of the company’s outstanding shares. Quite meaningful if you ask me.

Although I have noticed the magnificent balance sheet InfoSpace possesses, the stock’s pre-buyback announcement price of $29 a share shows that many investors clearly have not. By buying back stock and increasing the company’s earnings, Wall Street hopefully will see how undervalued the shares really are.

With $384 million in cash and no debt on InfoSpace’s balance sheet as of March 31st, shareholders need not worry that the $100 million investment will hurt the company’s ability to grow. At $30 per share, the stock remains dirt cheap and a very attractive acquisition candidate. A buyout at 20x earnings, net of cash, would amount to $48 for each INSP share.

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2 Thoughts on “InfoSpace Authorizes $100 Million Buyback

  1. simon abercrombie on May 18, 2005 at 9:40 AM said:

    Do you think that InfoSpace will keep up this growth of revenue and earnings? (over 80%)

  2. Chad Brand on May 18, 2005 at 10:55 AM said:

    InfoSpace’s growth isn’t anywhere near 80% anymore, nor will it be in the future. Growth in 2005 will be around 30%, with another 20% very doable in 2006. I think they can sustain 15%-20% annual growth for the next few years. Anything near that will bode well for shareholders, as the stock’s P/E is only 17.5x this year’s expected earnings, even after today’s 5% stock price jump.

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