From an estimated 2006 earnings perspective, Experian’s acquisition of PriceGrabber doesn’t look that expensive:
Shopzilla est. 2006 earnings = $50m
Shopzilla deal value = $560m or 11.2x est. 2006 earnings
PriceGrabber est. 2006 earnings = $35.25
PriceGrabber deal value = $485m or 13.8x est. 2006 earnings
Shopping.com est. 2006 earnings = $22.8m
Shopping.com deal value = $476m or 20.9x est. 2006 earnings

How I estimated the 2006 earnings…

PriceGrabber’s estimated 2005 earnings are impressive: $25m on revenue of $60m (for a 42% profit margin). Assuming PriceGrabber can grow earnings at the same rate as Shopzilla – 41% (see below), 2006 earnings will be $35.25m, The Experian acquisition is therefore valued at aprx. 13.8x PriceGrabber’s 2006 earnings. [Please note that increased exposure through Experian's network should significantly boost PriceGrabber's revenue at a low cost, but I have a feeling PriceGrabber will become more active on the PPC engines which again will increase revenue, but possibly hurt margins.]

So how does this compare to the Shopzilla and Shopping.com deals?

Shopzilla has strong earnings: I estimate $35.4m on revenues of $144.4m for a 25% profit margin (see my post here which includes assumptions of a Q3 to Q4 revenue increase of 50% and an increased profit margin in Q4) . Scripps has already said the company expects Shopzilla to have a profit of $50-$60m in 2006. Taking the low end of expectations means Scripps expects Shopzilla to grow earnings by 41%. The Scripps acquisition is therefore valued at 11.2x Shopzilla’s 2006 earnings.

Shopping.com’s revenue and earnings picture is a lot cloudier than Shopzilla’s. The last time Shopping.com publicly shared earnings information was in a July 28, 2005 8-k covering the first 6 months of 2005. In it, Shopping.com stated that “Adjusted net income for the six months ended June 30, 2005 was $6.9 million, exclusive of $1.5 million in Acquisition costs and $1.6 million of aggregate stock-based compensation and amortization of intangible assets.” Revenue for the same period was $56.6m for a profit margin of 12%.

In Q3 2005, Shopping.com had revenue of $29m. Assuming the profit margin stayed consistent at 12% (which is being generous considering that Shopping.com had a seasonal decrease in CPC prices and simultaneously seemed to increase PPC spending), the company would have earned $3.54m.

Now the guesstimation for Q4. eBay gave revenue guidance of $35m which I think is bogus because it would only mean 10% year over year growth (Q4 2004 revenue = $31.7m) AND Q3 to Q4 growth of 21%. I’m going to be generous with Shopping.com’s Q4 estimate and say that it will see 40% Q3 to Q4 growth which would equal $40.6m. Margins should also increase because 1) all their fixed costs – including salaries, health benefits, general administrative, and amortization of their software and technology – don’t go up and 2) Shopping.com (like most comparison shopping sites) increased its per click fees going into the holiday season. I estimated that Shopzilla’s margins for Q4 would increase aprx. 16%. Applying the same number to Shopzilla produces a Q4 margin of 14.1% which gives Shopping.com Q4 earnings of $5.75m.

To recap, that’s $126.2m in revenue and $16.18m in earnings for 2005.

Now I don’t think that Shopping.com’s earnings will grow at the 41% rate that I estimated for Shopzilla (from what I can tell, eBay is busy figuring out what to do with Skype and hasn’t done anything with Shopping.com), but just to keep things simple, I’ll apply the same earnings growth rate meaning the company will earn $22.8m in 2006. The eBay acquisition is therefore valued at 20.9x Shopping.com’s 2006 earnings. [Please note that a couple industry insiders have said that I'm probably low-balling Shopping.com's estimated earnings, but without data from the last 6 months, I'm sticking with my guesstimate.]

Previous PriceGrabber posts:
Quick Comparison of Shopping.com, Shopzilla, and PriceGrabber Deals – December 14, 2005
GUS Pls Explains PriceGrabber Acquisition – December 14, 2005
PriceGrabber Acquired for $485 million – December 14, 2005
PriceGrabber Autos – For Serious Car Buyers Only – November 30, 2005
Interview with PriceGrabber CEO Kamran Pourzanjani – November 29, 2005