Online advertising is steadily replacing traditional advertising amid a fast-paced digital transformation. Global ad spending is expected to increase 14% from its year-ago value to hit $657 billion in 2021. With increased consumer spending, companies are acknowledging the need now for aggressive advertising and marketing to attract and hold customers in an increasingly competitive business universe.
Worldwide advertising revenue is expected to jump 19% to $749 billion in 2021.
Given the expected increase in ad spending, Criteo S.A. (CRTO) and QuinStreet, Inc. (QNST) should witness substantial improvement in their financials and profit margins in the near terms. So, we think these two stocks could be solid additions to one’s portfolio now.
Criteo S.A. (CRTO)
Based in France, CRTO is a technology company that provides marketing and monetization services on the open Internet. Its solution consists of the Criteo Engine, the company’s data assets, access to inventory, and its advertiser and publisher platforms.
On June 16, CRTO and Carrefour Group signed an agreement under which Carrefour will use CRTO’s new platform for marketing its inventories. The move is a part of CRTO’s transformational strategy to strengthen its position in the Commerce Media space.
On May 20, CRTO announced its acquisition of Mabaya, a leading retail media technology company. This should enable CRTO to expand its capabilities and generate new revenue streams.
CRTO’s revenues increased 7% year-over-year to $541 million in its fiscal first quarter, ended March 31. Its net income grew 43% from its year-ago value to $23 million. The company’s EPS increased 40% year-over-year to $0.35. Its cash flow from operating activities rose 36% from the prior year quarter to $77 million over this period.
Analysts expect CRTO’s revenues to increase 6.7% year-over-year to $880.21 million in the current year. A $2.31 consensus EPS estimate for the current year indicates a 6.5% rise from the last year. Also, CRTO surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. Shares of CRTO have gained 240.1% over the past year, and 102% year-to-date.
It is no surprise that CRTO has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Growth, and a grade B for Value, Momentum, and Quality. Among the 43 stocks in the Internet – Services industry, CRTO is ranked #3.
To see additional CRTO ratings for Sentiment and Stability, click here.
QuinStreet, Inc. (QNST)
QNST in Foster City, Calif., is a digital performance marketing product and media company that provides customer acquisition services for its clients. The company offers online marketing services in the form of qualified clicks, leads, display advertisements, or impressions through its websites or the websites of third-party publishers.
QNST’s net revenue increased 19% year-over-year to $153.05 million in its fiscal third quarter, ended March 31. Its gross profit stood at $20.39 million, up 41.1% from the same period last year. Its operating income grew 55.9% from the year-ago value to $6.25 million. Its cash and cash equivalents balance rose 6.2% from the prior year quarter to $103.22 million over this period.
A $569.9 million consensus revenue estimate for the current year indicates a 16.2% increase year-over-year. The Street expects the company’s EPS to rise 30% from the prior year to $0.65 in the current year. QNST has an impressive earnings surprise history also; it beat the consensus EPS estimates in each of trailing four quarters. QNST has gained 57.7% over the past year to close yesterday’s trading session at $17.88.
QNST has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. QNST has a grade of A for Sentiment, and a grade of B for Growth and Momentum. It is ranked #9 in the same industry.
Click here to view additional QNST ratings for Quality, Value, and Stability.
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CRTO shares were trading at $39.75 per share on Friday afternoon, down $1.67 (-4.03%). Year-to-date, CRTO has gained 93.81%, versus a 16.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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