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Why Is Sabre (SABR) Down 2.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Sabre (SABR). Shares have lost about 2.7% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

Sabre Posts Narrower-Than-Expected Q2 Loss, Sales Up Y/Y

Sabre Corporation reported a narrower-than-expected loss for second-quarter 2022. The company’s adjusted loss per share was 25 cents compared with the Zacks Consensus Estimate of a loss of 35 cents. The figure was also narrower than the year-ago quarter’s loss of 52 cents per share.

Sabre reported revenues of $658 million for the second quarter, which is significantly higher than the $419.7 million in the year-ago period and surpassed the Zacks Consensus Estimate of $639.4 million. This year-over-year surge in the top line reflects a significant improvement in global air bookings among hotel and other bookings.

Top-Line Details

The Travel Solutions segment’s revenues increased to $599.1 million from the year-ago quarter’s $373.4 million, primarily on the gradual recovery in global air and other bookings.

Distribution (sub-division of Travel Solutions) revenues improved to $431.5 million from $218.2 million in second-quarter 2021, chiefly driven by the gradual recovery in bookings and an increase in average booking fee due to a shift in bookings mix.

IT Solution (sub-division of Travel Solutions) revenues were $167.6 million, up from the year-ago quarter’s $155.1 million. This increase was primarily driven by the gradual recovery in the passengers boarded. The number of boarded airline passengers — a key revenue metric for the IT Solutions division — increased to 160.2 million from 103.7 million in the prior-year quarter.

The Hospitality Solutions segment’s revenues totaled $66.2 million compared with the year-ago quarter’s $50.8 million. This upside was mainly fueled by the increase in central reservation system transactions and higher Digital Experience revenues. Central reservation system transactions rose to 29.5 million from 24 million in the year-ago quarter.

Sabre reported an adjusted operating loss of $9 million, significantly narrower than the operating loss of $122 million posted in the year-earlier period.

Adjusted EBITDA improved from a negative $70 million reported a year ago to $24 million. This improvement was driven by an increase in revenues and a decline in the provision for anticipated credit loss.

Balance Sheet and Cash Flow

Sabre exited the June-end quarter with cash, cash equivalents and restricted cash of $1.01 billion compared with the previous quarter’s $1.21 billion.

During the second quarter, the company utilized $73 million of cash for operational activities and generated a negative free cash flow of $89 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 11.69% due to these changes.

VGM Scores

Currently, Sabre has an average Growth Score of C, a grade with the same score on the momentum front. 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Sabre has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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