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 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.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
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
 
To read this article on Zacks.com click here.