A month has gone by since the last earnings report for Sabre (SABR). Shares have added about 18.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sabre due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Sabre Reports Wider-Than-Expected Loss in Q1
Sabre reported a wider-than-expected loss for first-quarter 2021. The company’s adjusted loss per share of 72 cents came in much wider than the Zacks Consensus Estimate of a loss of 51 cents. Quarterly adjusted loss was also way wider than the year-ago quarter’s loss of 29 centsper share.
The company’s revenues plunged to $327 million from the $659 million reported in the first quarter of 2020. Revenues were primarily affected by significant reductions in air, hotel and other travel bookings due to the coronavirus pandemic’s adverse impact on the global travel industry. Moreover, the top-line figure missed the Zacks Consensus Estimate of $431 million.
Travel Solutions segment’s revenues plunged 52% year over year to $289 million mainly on unprecedented disruptions in travel due to the pandemic.
Distribution (sub-division of Travel Solutions) revenues slumped 62% to $152 million due to lower bookings volume and decline in average booking fee. During the reported quarter, the company’s total bookings plummeted 55% to 38.94 million, chiefly due to a sharp decline of 52% in net air bookings and a fall of 72% in lodging, ground, and sea bookings.
IT Solutions (sub-division of Travel Solutions) revenues came in at $137 million, down 36% from the year-ago quarter, primarily on a 48% plunge in reservation revenues, and 29% in commercial and operations revenues. Number of boarded airline passengers, a key revenue metric for IT Solutions division, tanked 55% on a year-over-year basis.
The Hospitality Solutions segment’s revenues plunged 29%, year on year, to $42 million chiefly on a 16% decline in central reservation system transactions.
The company reported an adjusted operating loss of $167 million, more than double the operating loss of $73 million posted in the year-earlier period.
Balance Sheet and Cash Flow
Sabre ended the first quarter with cash and cash equivalents of $1.28 billion compared with the previous quarter’s $1.50 billion.
During the quarter, the company used $197 million of cash for operational activities and generated negative free cash flow of $204 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -62.5% due to these changes.
Currently, Sabre has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sabre has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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