Interval Leisure Group, Inc.
) is currently hovering around its 52-week high of $18.91, which it reached on June 22. This membership and leisure services company announced strong first-quarter results on May 8, and has become a Zacks #1 Rank (Strong Buy). With an expected earnings growth of 18.8% in 2012 and 31.2% in 2013, Interval Leisure Group looks to be a solid momentum pick.
Strong First Quarter
Interval Leisure Group reported an 8.3% year-over-year growth in total revenues to $126.7 million for the first quarter, which exceeded the Zacks Consensus Estimate of $120 million. The healthy top-line growth was attributable to incremental contributions from new products and services and accretive acquisitions, as the industry witnessed renewed optimism through inflow of new capital.
Earnings increased 17.4% year-over-year to 27 cents per share, and was in line with the Zacks Consensus Estimate. Adjusted EBITDA surged 7.8% year-over-year to $47.8 million. Free cash flow increased 30.3% for the quarter to $30.5 million.
Surge in Earnings Estimate Revisions
Over the past 60 days, the Zacks Consensus Estimate for 2012 increased 2.4% to 52 cents, implying year-over-year growth of 18.8%. For 2013, the Zacks Consensus Estimate has increased 6.7% to $1.11 over the same period, representing year-over-year growth of 31.2%.
Interval Leisure Groups valuation metrics are at a premium on a price-to-earnings (P/E) and price-to-sales (P/S) basis. Shares of Interval Leisure Group are currently trading at a forward P/E of 21.94x, versus the peer group average of 12.93x. On a P/S basis, Interval Leisure Group is currently trading at 2.38x, versus 2.33x for the peer group average.
A stupendous earnings growth prospect in the current and ensuing years warrants the premium valuation of the company and should impose enough confidence in investors, given its consistent track record of outperforming earnings estimates.
Chart Resonates Growth Potential
Since December 29, 2011, Interval Leisure Group shares have fared relatively better than the simple moving average for 200 days, or SMA (200). The stock has also outperformed the NASDAQ since March 9, 2012, with a year-to-date return of 35.92% compared to the NASDAQs 10.36%. Volume is fairly strong, averaging 218K daily.
Based in Miami, Florida, Interval Leisure Group is a premier provider of membership and leisure services to the vacation industry across the globe. The company offers travel and leisure related products and services under its primary business segment Membership and Exchange. The other business segment titled Management and Rental provides hotel, condominium resort, timeshare resort, and homeowners association management. It also provides vacation rental services to travelers and owners throughout North America. The company presently has a market cap of $1.05 billion.
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