Why Wix.com Stock Rose 22.9% in February

What happened

Wix.com (NASDAQ: WIX) stock climbed 22.9% in February, according to data provided by S&P Global Market Intelligence. Shares surged after the company reported fourth-quarter and full-year earnings results and delivered encouraging guidance.

So what

Wix reported fourth-quarter earnings on Feb. 14, with sales climbing roughly 41% year over year to reach $118.6 million and operating income up 150% to $9.7 million. The quarter rounded out a year of strong growth for the website development platform company, one that saw free cash flow rise 95% to reach $70.7 million. The earnings report was also accompanied by promising guidance for the current fiscal year.

Now what

The company expects strong sales growth to continue this year, with a forecast for revenue to increase by 39% to 40%. As a popular option for easily creating a website, Wix is positioned to benefit from the increasing importance of having an online presence and growth of e-commerce. Its platform has been the go-to choice for general-purpose website construction, while rival Shopify is better set up for dedicated online retail platforms. However, Wix has been steadily building its e-commerce features. That's a move that stands to bring more high-value customers on board with the company's service.

Gradual cost increases across its broader platform, improving functionality, and marketing initiatives look primed to help the company keep its growth engine running at full throttle. Shares look attractively priced at roughly 5.7 times forward sales estimates and 33 times this year's expected free cash flow.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.