Why Is Tree.com (TREE) Up 15.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Tree.com (TREE). Shares have added about 15.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
LendingTree Q4 Earnings Beat Estimates, Revenues Fall
LendingTree’s fourth-quarter 2023 adjusted net income per share of 28 cents beat the Zacks Consensus Estimate of 14 cents. However, the reported figure compares unfavorably with 38 cents reported in the prior-year quarter.
The company’s results were aided by lower costs, while a decline in revenues was a spoilsport.
LendingTree reported net income of $12.7 million against a loss of $10.4 million in the year-ago quarter.
In 2023, adjusted net income per share of $2.28 beat the consensus estimate of $2.14 and increased from $1.07 in the prior year. The company recorded a net loss of $122.4 million compared with $188 million recorded in the prior year.
Revenues & Variable Marketing Margin Decline
Total revenues were down 33.5% year over year to $134.4 million in the fourth quarter. The downside stemmed from a decline in the Home, Consumer, Insurance and Other segments' revenues. Also, the reported figure missed the Zacks Consensus Estimate of $135.6 million.
In 2023, total revenues declined 31.7% year over year to $672.5 million. Also, the top line missed the Zacks Consensus Estimate of $674 million.
The total cost of revenues was $8.1 million, down nearly 40% from the prior-year quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $15.5 million, down 7.2% year over year. The variable marketing margin was at $60.6 million, down 22.4%.
As of Dec 31, 2023, cash and cash equivalents were $112.1 million compared with $298.8 million as of 2022-end. Long-term debt was $525.6 million compared with $813.5 million as of 2022-end.
Outlook
For the first quarter of 2024, total revenues are estimated to be between $158 million and $168 million. Adjusted EBITDA and the variable marketing margin are anticipated to be $17-$21 million and $66-$72 million, respectively.
For 2024, total revenues are projected to be between $650 million and $690 million. Adjusted EBITDA is suggested in the $85-$95 million band. The variable marketing margin is expected to be between $280 million and $300 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted 10.71% due to these changes.
VGM Scores
Currently, Tree.com has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 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 downward for the stock, and the magnitude of these revisions looks promising. Notably, Tree.com has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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LendingTree, Inc. (TREE) : Free Stock Analysis Report
