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LendingTree (TREE) Stock Up 5.7% Despite Q1 Earnings Miss

Zacks Equity Research

LendingTree TREE reported a negative earnings surprise of 12.7% in first-quarter 2019. Adjusted net income per share of $1.10 lagged the Zacks Consensus Estimate of $1.26. However, the figure comes in line with the prior-year quarter's reported tally.

The company’s results reflected rise in expenses. However, higher revenues, with major contribution from non-mortgage products revenues, were a tailwind. Also, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed impressive growth. All these positives raised investors’ optimism leading to 5.78% rise in shares of LendingTree, following the release.

The company reported GAAP net income of $0.6 million or 4 cents per share compared with $35.9 million or $2.41 in the year-ago quarter.

Revenue Growth Partially Offset by Higher Expenses

Total revenues soared 45% year over year to $262.4 million in the first quarter. This upside primarily stemmed from higher non-mortgage product revenues, partly mitigated by lower mortgage revenues. Further, the reported figure outpaced the Zacks Consensus Estimate of $239 million.

Total costs and expenses came in at $264.2 million, flaring up 59.4% from the prior-year quarter. This upswing primarily resulted from rise in almost all components of cost.

Adjusted EBITDA totaled $43 million, up 36% from $31.7 million reported in the prior-year quarter.

As of Mar 31, 2019, cash and cash equivalents were $65 million, down nearly 38.5% from Dec 31, 2018. Long-term debt inched up 1.3% from the prior-year end to $254.2 million. Total shareholders' equity was $352.2 million, up 1.7% from the Dec 31, 2018 level.

Outlook

Concurrent with the first-quarter results, management provided second-quarter 2019 guidance, as well as revised its full-year 2019 estimates.

Second-Quarter 2019

  • Total revenues projected at $260-$270 million.
  • Adjusted EBITDA estimated in the $45-$47 million band.
  • Variable Marketing Margin is projected at $92-$97 million.


Full-Year 2019

  • Total revenues of $1,060-$1,090 million predicted, up from the previous projection of $1,010-$1,045 million.
  • Adjusted EBITDA anticipated in the $210-$220 million band, up from the prior forecast of $205-$215 million.
  • Variable Marketing Margin is projected at $400-$415 million, up from the prior estimate of $385-$400 million.


Conclusion

LendingTree put up a decent performance during the January-March period as compared to the prior-year period. The company’s expansion strategy for its non-mortgage business seems to be working well, mirrored by the continued rise in non mortgage revenues. Also, LendingTree’s commitment to diversify product offerings beyond mortgage-related products augurs well for the long term.

Nevertheless, escalating expenses remain a concern.
 

LendingTree, Inc. Price, Consensus and EPS Surprise

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

Currently, LendingTree carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

BOK Financial BOKF delivered a positive earnings surprise of 5.5% in the March-end 2019. Earnings per share of $1.54 outpaced the Zacks Consensus Estimate of $1.46. The bottom line, however, compared unfavorably with the prior-year quarter’s reported tally of $1.61. Results include certain one-time items.

People's United Financial Inc. PBCT recorded first-quarter operating earnings of 33 cents per share, in line with the Zacks Consensus Estimate. The reported figure improved 10%, year over year.

Riding on higher revenues, Citizens Financial Group, Inc. CFG delivered a positive earnings surprise of 4.5% in first-quarter 2019. Adjusted earnings per share came in at 93 cents, beating the Zacks Consensus Estimate of 89 cents. Also, the reported figure improved 19.2% year over year. Results excluded one-time items of $4 million or 1 cent per share.

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