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What: Shares of Orbitz Worldwide were breaking out of orbit today, gaining 24% after reporting earnings this morning.
So what: The travel-deal merchant posted a per-share profit of $1.34; however, without a large tax benefit, the company had a loss of $0.11. Analysts had expected a loss of $0.06. Still, revenue was better than expected, climbing 7%, to 202.9 million, while analysts had expected sales of $198.1 million, or an increase of 4.4%. Sales in Orbitz's hotel division were strong, as room nights sold grew by 14%, and revenue from the category was up 27%. CEO Barney Harford noted that room-night growth has been even stronger in recent months, increasing 20% in March and April. Sales from airline tickets fell 4%, however.
Now what: Management also guided revenue for the quarter above estimates, saying it expects $214 to $220 million, while the analyst consensus is at $212.6 million. The January-March quarter is generally Orbitz's slowest, but the steeper loss than expected is concerning, nonetheless. Improved revenue growth is nice, of course, but Orbtiz operates in a fiercely competitive industry, up against the likes of Expedia, priceline.com, and Kayak, among others. Despite the slim profits, the stock is not cheap, and top-line improvements aren't trickling down to the bottom. I'd stay away from this one.
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The article Why Orbitz Shares Shot Up originally appeared on Fool.com.
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