Outbrain Stock Before Q4 Earnings: Smart Buy or a Risky Move?

Core Viewpoint - Outbrain Inc. is expected to report fourth-quarter 2024 results on February 27, with revenue estimates suggesting a 7.1% growth year-over-year, but earnings are projected to be at breakeven compared to 9 cents per share a year ago [1][2]. Financial Performance - The Zacks Consensus Estimate for revenues in the upcoming quarter is $68.3 million, indicating a 7.1% increase from the previous year [2]. - Outbrain has a history of earnings surprises, having beaten the Zacks Consensus Estimate in the last four quarters with an average surprise of 144.6% [3]. - The company currently has an Earnings ESP of 0.00% and a Zacks Rank of 1 (Strong Buy) [4][5]. Partnerships and Growth Drivers - In Q3 2024, Outbrain renewed key agreements with publishing partners like Huffington Post and expanded partnerships with competitors, enhancing its premium inventory and performance data [6][7]. - The company’s revenue from supply beyond traditional feeds accounted for nearly 28% of total revenue in Q3 2024, up from 26% in Q3 2023, indicating consistent growth in this area [15]. Stock Performance and Valuation - Outbrain's stock has increased by 46.3% over the past year, underperforming its industry’s 58.3% rise but outperforming the S&P 500's 19.1% increase [8]. - The stock is currently trading at a trailing 12-month price-to-earnings ratio of 15.7X, significantly lower than the industry average of 42.1X, suggesting it is undervalued [12]. Financial Position - As of Q3 2024, Outbrain had$ 131 million in cash and no outstanding debt, providing a strong financial position to invest in technology and market expansion [14]. - The company has demonstrated sustainable growth with positive free cash flow for five consecutive quarters and has consistently exceeded adjusted EBITDA expectations [16][17]. Investment Considerations - Outbrain is well-positioned for future success due to its premium media partnerships, diversified offerings, and strong balance sheet, making it an attractive investment opportunity this earnings season [17][18].