LendingTree (TREE) Stock Down 15.5% as Q4 Earnings Fall Y/Y

Shares of LendingTree TREE declined 15.4% following the release of its fourth-quarter 2020 results. The company reported adjusted net income per share of 13 cents in the quarter, slumping 88% from the $1.12 reported in the prior-year quarter. The Zacks Consensus Estimate was pegged at a loss of 69 cents.

The company’s performance was adversely impacted by lower consumer revenues on the coronavirus crisis, partially offset by decreased expenses and a strong cash position. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reflect a decline from the prior-year quarter.

The company reported GAAP net loss of $8.1 million or 62 cents per share compared with the $1.5 million or 11 cents reported in the year-ago quarter.

For 2020, net loss (GAAP basis) was $48.2 million or $3.71 per share as against the net income of $17.8 million or $1.22 witnessed in 2019.

Revenues Decline, Expenses Fall

For 2020, total revenues were $909.9 million, down 17.8% year over year. The revenue figure comes in line with the Zacks Consensus Estimate.
Total revenues slid 13% year over year to $222.3 million in the final quarter of 2020. This downside primarily stemmed from lower consumer revenues. The reported figure, however, surpassed the Zacks Consensus Estimate of $221.3 million.

Total costs and expenses came in at $226.1 million, down 8% from the prior-year quarter. This decline chiefly resulted from a drop in cost of sales, selling and marketing expenses, amortization of intangibles and severance and litigation expenses.

Adjusted EBITDA totaled $26.3 million, significantly down 43% from the $45.9 million reported in the year-earlier quarter. Variable marketing margin came in at $82.3 million, down 12% year over year.

As of Dec 31, 2020, cash and cash equivalents were $169.9 million, up a whopping 182% from Dec 31, 2019. Long-term debt was down 51.5% from the prior-year end to $111.8 million. Total shareholders' equity was $364.7 million, down 9.3% from the Dec 31, 2019 level.

Outlook

Concurrent with the December-end quarter results, management issued first-quarter 2021 estimates.

First-Quarter 2021

• Total revenues of $260-$270 million projected.
• Adjusted EBITDA anticipated in the $20-$25 million band.
• Variable Marketing Margin projected at $80-$85 million.

Conclusion

LendingTree put up a disappointing show during the October-December period in terms of earnings. The company’s inconsistent quarterly performance, unsustainable capital-deployment activities and reduction in consumer revenues are near-term headwinds. Nonetheless, the bank’s decreasing dependence on mortgage-related sources of revenues and strategic initiatives of acquisitions bode well for the long haul.

LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. Price, Consensus and EPS Surprise

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

Currently, LendingTree carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

TCF Financial Corporation TCF reported fourth-quarter 2020 adjusted earnings per share of 75 cents, topping the Zacks Consensus Estimate. The figure, however, decreased 16.7% from the prior-year quarter.

BOK Financial BOKF delivered an earnings surprise of 11.1% in the fourth quarter. Earnings per share of $2.21outpaced the Zacks Consensus Estimate of $1.99. Further, the bottom line compared favorably with the prior-year quarter’s $1.56.

Texas Capital Bancshares Inc. TCBI recorded adjusted earnings per share of $1.14 in fourth-quarter 2020, inching past the Zacks Consensus Estimate of $1.13. Yet, results compared unfavorably with the year-ago quarter’s $1.23.

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