Assessing Travelzoo’s (NASDAQ:TZOO) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess TZOO’s recent performance announced on 31 March 2018 and evaluate these figures to its long-term trend and industry movements. Check out our latest analysis for Travelzoo
Commentary On TZOO’s Past Performance
TZOO’s trailing twelve-month earnings (from 31 March 2018) of US$3.23m has declined by -35.86% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -9.84%, indicating the rate at which TZOO is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is facing the same headwind.
Although revenue growth over the last couple of years, has been negative, earnings growth has been declining by even more, suggesting that Travelzoo has been increasing its expenses. This hurts margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 17.40% over the past twelve months, and 18.27% over the past half a decade. This suggests that any uplift the industry is benefiting from, Travelzoo has not been able to realize the gains unlike its industry peers.
In terms of returns from investment, Travelzoo has not invested its equity funds well, leading to a 19.15% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 6.94% is below the US Internet industry of 7.42%, indicating Travelzoo’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Travelzoo’s debt level, has increased over the past 3 years from 10.44% to 32.34%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. In some cases, companies that face a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase in order to keep up with the latest industry disruption and growth. You should continue to research Travelzoo to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TZOO’s future growth? Take a look at our free research report of analyst consensus for TZOO’s outlook.
- Financial Health: Is TZOO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.