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Why Is Sabre (SABR) Up 64.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for Sabre (SABR - Free Report) . Shares have added about 64.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sabre due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Sabre Third-Quarter Results

Sabre reported a wider-than-expected loss for third-quarter 2020. The company’s adjusted loss per share of 82 cents came in much wider than the Zacks Consensus Estimate of loss of 63 cents. The bottom-line figure also compares unfavorably with the year-ago quarter’s earnings of 27 cents per share.

The company’s revenues plunged to $278 million from the $984 million reported in the third quarter of 2019. Moreover, the top-line figure missed the Zacks Consensus Estimate of $274 million. Revenues were primarily affected by significant reductions in air, hotel and other travel bookings due to the coronavirus pandemic’s adverse impact on the global travel industry.

Revenue Details

Travel Network revenues plunged 74% year over year to $237 million mainly due to unprecedented disruptions in travel due to the COVID-19 pandemic. The Distribution revenues slumped 84% to $104.6 million. During the quarter, the company’s total bookings plummeted 86% to 19.92 million, chiefly due to a sharp decline of 87% in net air bookings and a fall of 80% in lodging, ground, sea bookings.

IT Solutions revenues came in at $132.4 million, down 46% from the year-ago quarter, primarily on a 62% plunge in reservation revenues, and 28% in commercial and operations revenues. Numbers of boarded airline passengers, a key revenue metric for IT Solutions division, tanked 70% on a year-over-year basis.

Hospitality Solutions segment’s revenues plunged 40% year over year to $44.9 million on a 37% decline in central reservation system transactions.

The company reported adjusted gross profit of $192.8 million, slumping 68% from the year-ago quarter.

Adjusted operating loss was $196.7 million in the September-end quarter, as against the operating income of $133.1 million recorded in the year-earlier period.

Balance Sheet and Cash Flow

Sabre ended the third quarter with cash and cash equivalents of $1.67 billion compared with the previous quarter’s $1.31billion.

During the first nine months of 2020, the company used $587.1 million of cash for operational activities.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -19.27% due to these changes.

VGM Scores

At this time, Sabre has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sabre has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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