It has been about a month since the last earnings report for Sabre (SABR). Shares have lost about 8.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sabre due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sabre reported wider-than-expected loss for second-quarter 2020. The company’s adjusted loss per share of $1.30 came in much wider than the Zacks Consensus Estimate of loss of 78 cents. The bottom-line figure also compared unfavorably with the year-ago quarter’s earnings of 24 cents per share.
The company’s revenues plunged to $83 million from the $1 billion reported in the second quarter of 2019. Moreover, the top-line figure missed the Zacks Consensus Estimate of $178 million. 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.
Travel Network revenues came in at negative $33 million mainly due to net negative bookings in the quarter, as cancellations exceeded new bookings. The Global Distribution System environment witnessed a slump of 105% on higher cancellations than new bookings. Net air bookings were also negative due to higher cancellations.
Airline Solutions revenues came in at $90 million, down 58% from the year-ago quarter, primarily on a 75% decline in reservation revenues, and 32% in commercial and operations revenues.
Hospitality Solution revenues plummeted 61% year over year to $29 million on a 62% decline in central reservation system transactions.
The company reported an adjusted gross loss of $129 million, as against the adjusted gross profit of $350.4 million recorded in the year-ago quarter.
Adjusted operating loss was $306.8 million in the June-end quarter as against the operating income of $127 million in the year-earlier period.
Balance Sheet and Cash Flow
Sabre ended the second quarter with cash and cash equivalents of $1.31 billion compared with the previous quarter’s $684.5 million.
During the first half of 2020, the company used $395 million of cash for operational activities.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -43.16% due to these changes.
At this time, Sabre has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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