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LendingTree (TREE) Q2 Earnings Miss Estimates on Low Revenues

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Zacks Equity Research
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LendingTree TREE reported second-quarter 2020 adjusted net income per share of 46 cents, missing the Zacks Consensus Estimate of 61 cents. Further, the figure comes in lower than the prior-year quarter’s $1.18 per share.

Investors’ concerns highlighted reducing consumer revenues on coronavirus woes, resulting in a share-price decline of 6.55% following the earnings release. Moreover, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed decline. However, the company’s results were aided by lower expenses and a strong cash position.

The company reported GAAP net loss of $8.6 million or 66 cents per share, as against the net income of $13 million or 87 cents recorded in the year-ago quarter.

Revenues Decline, Costs Down

Total revenues plunged 34% year over year to $184.3 million in the second quarter of 2020. This decrease primarily stemmed from lower consumer and other revenues, partly offset by higher home and insurance revenues. The reported figure also lagged the Zacks Consensus Estimate of $185.1 million.

Total costs and expenses came in at $191.9 million, down 27.9% from the prior-year quarter. This decline chiefly resulted from fall in cost of revenues, and selling and marketing expense.

Adjusted EBITDA totaled $30.8 million, down 33% from the $46.3 million reported in the prior-year quarter. Variable marketing margin was $82.5 million, down 12% year over year.

As of Jun 30, 2020, cash and cash equivalents were $101.8 million, surging nearly 69% from Dec 31, 2019. Long-term debt was up 2.6% from the prior-year end to $271.4 million. Total shareholders' equity was $406 million, up 1% from the Dec 31, 2019 level.

Outlook

Concurrent with the June-end quarter results, management has issued third-quarter 2020 estimates.

Third-Quarter 2020

  • Total revenues of $200-$215 million projected.

  • Adjusted EBITDA anticipated in the $16-$21 million band.

  • Variable Marketing Margin projected at $72-$80 million.

Conclusion

LendingTree put up a decent performance during the April-June period. The company’s expansion strategy for its non-mortgage business seems to be working well. Though reduction in consumer revenues and rising debt level are concerns, the company’s commitment to diversify its product offerings beyond mortgage-related products augurs well for the long haul. Moreover, controlled expenses are a tailwind.

LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. Price, Consensus and EPS Surprise
LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. price-consensus-eps-surprise-chart | LendingTree, Inc. Quote


Currently, LendingTree carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

First Republic Bank FRC delivered an earnings surprise of 16.7% in second-quarter 2020 aided by solid top-line strength. Earnings per share of $1.40 surpassed the Zacks Consensus Estimate of $1.20. Additionally, the bottom line climbed 12.9% from the year-ago quarter.

First Horizon National Corporation FHN reported second-quarter 2020 adjusted earnings per share of 20 cents, missing the Zacks Consensus Estimate of 21 cents. Further, the bottom line was 52.4% lower than the year-ago figure.

BOK Financial BOKF reported a negative earnings surprise of 21.4% for the June-end quarter. Earnings per share of 92 cents lagged the Zacks Consensus Estimate of $1.17. Further, the bottom line compared unfavorably with the prior-year quarter’s $1.93.

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BOK Financial Corporation (BOKF) : Free Stock Analysis Report
 
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