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LendingTree (TREE) Cuts Q2 View on Inflation & Mortgage Woes

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LendingTree, Inc. TREE has trimmed its guidance for the second quarter amid ongoing macro headwinds.

Management noted, “Despite rapid increases in interest rates, rampant consumer price inflation, and looming recession fears presenting persistent headwinds for some of our operating segments, our diversified business model and strong balance sheet allow us to continue to strengthen our competitive position while navigating shorter-term macro driven challenges."

Management underlined the challenging interest rate environment during the quarter, along with annual inflation continuously running above 8%. These have created notable headwinds for many of the company’s mortgage lending and insurance partners. Moreover, mortgage rates have spiked over the past six months, resulting in a sharp decline in refinance volumes and pressure on purchase activity. This has affected its Home segment’s operations.

While LendingTree’s Insurance segment continues to rebound from the trough in fourth-quarter 2021, the recovery has been slower than expected due to volatile demand from its carrier partners, as rising premium continues to catch up with inflation.

For second-quarter 2022, total revenues are estimated to be $259-$264 million, down from the prior mentioned $283-$293 million. Adjusted EBITDA is projected to be $26-$29 million, down from $35-$40 million stated earlier. The variable marketing margin is anticipated to be $88-$92 million compared with the $100-$106 million mentioned earlier.

Nonetheless, the company’s Consumer segment continues to perform decently and it anticipates 40% growth for the quarter. TREE’s balance sheet remains incredibly solid and well-poised to navigate the near-term headwinds.

Per management, "Our variable marketing model continues to serve us well as difficult economic forces have persisted, and in many instances worsened, so far this year.”

Over the past year, shares of this Zacks Rank #3 (Hold) company have lost 75.4% compared with a 46.9% decline for the industry.

 

Zacks Investment Research
Zacks Investment Research


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Finance Stocks Worth a Look

A couple of better-ranked major banks are Comerica CMA and M&T Bank MTB. At present, CMA sports a Zacks Rank #1 (Strong Buy) and MTB carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past year, shares of Comerica have declined 1.1%, while that of M&T Bank have jumped 5.4%.

Over the past 30 days, the Zacks Consensus Estimate for Comerica’s current-year earnings has been revised 1.2% upward, while the same for M&T Bank has moved 2.4% north.


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