Travelzoo Beats Estimates Yet Again

Seth Jayson, The Motley Fool
Updated

Travelzoo (NAS: TZOO) reported earnings on Jan. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Travelzoo missed on revenue and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved significantly, and earnings per share expanded significantly.

Gross margins contracted, operating margins shrank, and net margins grew.

Revenue details
Travelzoo tallied revenue of $35.2 million. The five analysts polled by S&P Capital IQ expected sales of $38.5 million. Sales were 23% higher than the prior-year quarter's $28.5 million.

anImage
anImage

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
EPS came in at $0.40. The five earnings estimates compiled by S&P Capital IQ averaged $0.35 per share. GAAP EPS of $0.40 for Q4 were 75% higher than the prior-year quarter's $0.23 per share.

anImage
anImage

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 89.5%, 260 basis points worse than the prior-year quarter. Operating margin was 23.3%, 30 basis points worse than the prior-year quarter. Net margin was 18.3%, 500 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $44.2 million. On the bottom line, the average EPS estimate is $0.42.

Next year's average estimate for revenue is $177.2 million. The average EPS estimate is $1.67.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 471 members out of 660 rating the stock outperform, and 189 members rating it underperform. Among 202 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 133 give Travelzoo a green thumbs-up, and 69 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Travelzoo is buy, with an average price target of $39.80.

Over the decades, small-cap stocks like Travelzoo have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Travelzoo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement