Tree.com (TREE) Up 17.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Tree.com (TREE). Shares have added about 17.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tree.com 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 catalysts.
Lending Tree Q3 Earnings Beat, Revenues Fall
LendingTree reported adjusted net income per share of 61 cents in third-quarter 2023, which beat the Zacks Consensus Estimate of 39 cents. The reported figure compares favorably with an adjusted net loss of 36 cents reported in the prior-year quarter.
The company’s results were aided by lower costs, while a decline in revenues was a spoilsport. Management reduced the guidance for 2023.
LendingTree reported a net loss of $148.5 million compared with a loss of $158.7 million in the year-ago quarter.
Revenues & Variable Marketing Margin Decline
Total revenues were down 34.7% year over year to $155.2 million in the third quarter. The downside stemmed from a decline in the Home, Consumer and Insurance segments' revenues. Also, the reported figure missed the Zacks Consensus Estimate of $161.6 million.
The total cost of revenues was $7.6 million, down 46.3% from the prior-year quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $21.8 million, up significantly year over year. The variable marketing margin was at $67.7 million, down 9.4%.
As of Sep 30, 2023, cash and cash equivalents were $175.6 million compared with $298.8 million as of 2022 end. Long-term debt was $625.7 million compared with $813.5 million as of 2022 end.
Outlook
For the fourth quarter of 2023, total revenues are estimated between $132 million and $142 million. Adjusted EBITDA and the variable marketing margin are anticipated to be $11-$17 million and $55-$65 million, respectively.
For 2023, total revenues are estimated between $670 million and $680 million. Adjusted EBITDA is anticipated to be $74-$80 million. The variable marketing margin is expected to be between $275 million and $285 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Tree.com has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tree.com has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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LendingTree, Inc. (TREE) : Free Stock Analysis Report
