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What Should You Know About LendingTree, Inc.'s (NASDAQ:TREE) Earnings Trajectory?

Simply Wall St

The most recent earnings update LendingTree, Inc.'s (NASDAQ:TREE) released in December 2018 signalled that the business gained from a significant tailwind, more than doubling its earnings from the prior year. Below, I've presented key growth figures on how market analysts predict LendingTree's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for LendingTree

Market analysts' prospects for this coming year seems pessimistic, with earnings declining by a double-digit -34%. In the next couple of years, earnings will begin to improve, expanding year on year, and reaching US$147m by 2022.

NasdaqGS:TREE Past and Future Earnings, April 10th 2019

Although it’s helpful to be aware of the rate of growth year by year relative to today’s value, it may be more insightful to determine the rate at which the earnings are moving every year, on average. The benefit of this method is that we can get a bigger picture of the direction of LendingTree's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 12%. This means that, we can anticipate LendingTree will grow its earnings by 12% every year for the next couple of years.

Next Steps:

For LendingTree, there are three important aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is TREE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TREE is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TREE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.