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Bear of the Day: Travelzoo (TZOO)

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Travelzoo (TZOO - Free Report) is a popular online travel website that compiles deals on hotels, flights, vacations, cruises, and local and entertainment deals for its millions of members worldwide. The company operates in North America and Europe (it recently exited its Asia Pacific business), and is headquartered in New York.

Q1 Earnings Recap

Travelzoo’s first quarter results reflect the lingering impacts of the coronavirus pandemic on the travel industry.

Consolidated revenue fell 30% year-over-year to $14.3 million (but is up 14% quarter-over-quarter). The company’s North America business decreased 23%, while its Europe segment fell 48% compared to the prior-year period.

GAAP EPS was a loss of $0.14 per share, which missed the consensus estimate.

The company had 31.8 million members at the end of Q1, and membership in North America grew 7% year-over-year to 18.1 million.

Bottom Line

TZOO is now a Zacks Rank #5 (Strong Sell).

Two analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 10 cents to $0.14 per share. But, earnings are expected to see a triple-digit increase for fiscal 2021 as the bottom line begins to recover from 2020.

Shares have been hot so far in 2021 as travel and recreational stocks have benefitted from optimism about the economic reopening. Year-to-date, TZOO is up 67.2%

Travelzoo expects to report significantly higher revenue and profitability for Q2, and management sees a revenue recovery trend going forward. However, there are still plenty of travel restrictions in place, as well as broad unknowns when it comes to Covid-19, so investors may want to stay on the sidelines for now.

Investors who are interested in adding an internet-commerce stock to their portfolio could consider Groupon (GRPN - Free Report) . GRPN is a #3 (Hold) on the Zacks Rank, and earnings are expected to grow 143.5% in fiscal 2021.

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