|
Travel Zoo is
scheduled to report Q208 results after the market closes on July
24. Based on our analysis, we at
eChristianInvesting are expecting TZOO to report better than
expected results that beat Wall Street’s consensus expectations.
We are
forecasting revenues of $21.7M versus analyst consensus of
$21.0M. This would represent an 8% increase in revenues from
last year’s $20.1M in the same period.
We expect
that the downturn in the U.S. economy was actually a positive
for Travel Zoo’s
business. High gas prices led vacationers to look more
diligently for vacation bargains. This appears to have resulted
in increased traffic levels to the site and a jump in
subscription levels for the popular Top 20 email newsletter.
Share Performance
Travel Zoo’s shares
have dropped a whopping 40% this year. That compares poorly to
the much more modest drop of only 13% for the NASDAQ.
Unfortunately for Travel Zoo, they were the victim of their own
success as they traded at a very high valuation for most of last
year. The drop in overall valuations as well as the markets
realization that expansion into Europe and Asia-Pacific was
going to have a serious effect on their short-term profitability
has resulted in the big sell-off this year.
Valuation
Shares are
now trading at 27x consensus 2009 EPS estimates. This represents
a slight premium to their peer group. While we see upside
potential in the company’s top line, the expense in expanding
their business internationally is likely to hit the bottom line
again this quarter. Therefore, we expect the shares to remain
range-bound or possibly even trade lower following the earnings
announcement.
At the time this article was
published, the author did not have a financial position in any
of the stocks mentioned in this article.
Read
Disclosure Policy |
