Why Shares of Orbitz Worldwide, Inc. Skyrocketed
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Orbitz Worldwide were taking off today, gaining as much as 32% after the company turned in a better-than-expected fourth-quarter earnings report.
So what: The travel-accommodations website delivered per-share earnings of $0.05, better than estimates of breakeven, while revenues increased 4.1% to $197.4 million, also beating the consensus at $191.2 million. Sales in the quarter were boosted by its hotel division, which grew 18%, while airline ticket sales fell 11%. Orbitz and its competitors have been increasingly turning to hotel reservations to drive bottom-line growth as they're more profitable than airline tickets. The fourth quarter also tends to be a seasonally slow one for Orbitz, so investors seemed happy that the travel service was able to squeeze out a profit. CEO Barney Harford said he expected "strong growth" in 2014 and beyond.
Now what: Despite Harford's optimism, Orbitz's first-quarter guidance was actually off the mark at $202 million to $207 million against analyst estimates of $207 million. For the year, the company expects revenue growth in the low-to-mid single digits, in line with estimates of a 3.7% increase. Orbitz has been an especially volatile stock lately, having tripled in the past year but still off nearly 30% from its high this summer. The travel bookings industry is extremely competitive, and Orbitz seems to be stuck in the middle of the pack with slow top-line growth and slim profits. Even with today's bounce, I wouldn't expect shares to see that $12.62 high anytime soon.
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The article Why Shares of Orbitz Worldwide, Inc. Skyrocketed originally appeared on Fool.com.
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
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