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LendingTree (TREE) Stock Down 16.22% on Q2 Earnings Miss

LendingTree TREE reported a negative earnings surprise of 13.9% in second-quarter 2019. Following the release, shares were significantly down by 16.22%. Adjusted net income per share of $1.18 lagged the Zacks Consensus Estimate of $1.37. Further, the figure came in below the prior-year quarter’s reported figure of $1.47 per share.

The company’s results were adversely impacted by rise in expenses and lower mortgage revenues. However, higher revenues, with major contribution from non-mortgage products revenues, were a tailwind. Also, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed impressive growth.

The company reported GAAP net income of $13 million or 87 cents per share compared with $44.8 million or $3.17 in the year-ago quarter.

Revenue Growth Partially Offset by Higher Expenses

Total revenues soared 51% year over year to $278.4 million in the second quarter. This upside primarily stemmed from higher non-mortgage product revenues, partly mitigated by lower mortgage revenues. Furthermore, the reported figure outpaced the Zacks Consensus Estimate of $267.4 million.

Total costs and expenses came in at $266.1 million, flaring up 60.3% from the prior-year quarter. This upswing primarily resulted from rise in almost all components of cost.

Adjusted EBITDA totaled $46.3 million, up 25% from $37.1 million reported in the prior-year quarter.

As of Jun 30, 2019, cash and cash equivalents were $51.3 million, down nearly 51.2% from Dec 31, 2018. Long-term debt was up 2.7% from the prior-year end to $257.6 million. Total shareholders' equity was $373.9 million, up 8% from the Dec 31, 2018 level.

Outlook

Concurrent with the second-quarter results, management provided the third-quarter guidance, as well as revised its full-year 2019 estimates.

Third-Quarter 2019

  • Total revenues projected at $290-$300 million.
  • Adjusted EBITDA estimated in the $55-$60 million band.
  • Variable Marketing Margin is projected at $104-$109 million.

Full-Year 2019

  • Total revenues of $1,080-$1,100 million predicted, up from the previous projection of $1,060-$1,090 million.
  • Adjusted EBITDA anticipated in the $195-$205 million band, down from the prior forecast of $210-$220 million.
  • Variable Marketing Margin is projected at $390-$405 million, down from the prior estimate of $400-$415 million.

Conclusion

LendingTree put up a decent performance during the April-June period as compared to the prior-year period. The company’s expansion strategy for its non-mortgage business seems to be working well, mirrored by the continued rise in non-mortgage revenues. This apart, LendingTree’s commitment to diversify product offerings beyond mortgage-related products augurs well for the long haul.

Nevertheless, escalating expenses remain a concern.
 

LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. price-consensus-eps-surprise-chart | LendingTree, Inc. Quote

Currently, LendingTree carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

Cullen/Frost Bankers, Inc. CFR reported earnings per share of $1.72 in second-quarter 2019, in line with the Zacks Consensus Estimate. Results compared favorably with the prior-year quarter figure of $1.68 per share.

Driven by top-line strength, Synovus Financial SNV reported a positive earnings surprise of 1.01% in the second quarter. Adjusted earnings of $1.00 per share beat the Zacks Consensus Estimate of 99 cents. Also, the reported figure came in 8.4% higher than the prior-year quarter tally.

Riding on higher revenues, Citizens Financial Group CFG delivered a positive earnings surprise of 2.1% in the June-end quarter. Adjusted earnings per share came in at 96 cents, beating the Zacks Consensus Estimate of 94 cents. Also, the bottom line improved 9.1% year over year.

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Synovus Financial Corp. (SNV): Free Stock Analysis Report
 
Cullen/Frost Bankers, Inc. (CFR): Free Stock Analysis Report
 
LendingTree, Inc. (TREE): Free Stock Analysis Report
 
Citizens Financial Group, Inc. (CFG): Free Stock Analysis Report
 
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