It has been about a month since the last earnings report for Sabre (
SABR Quick Quote SABR - Free Report) . Shares have added about 2.7% in that time frame, underperforming 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’s Q2 Loss Narrower Than Expected, Sales Up Y/Y
Sabre reported a narrower-than-expected loss for second-quarter 2021. The company’s adjusted loss per share of 52 cents came in much narrower than the Zacks Consensus Estimate of a loss of 62 cents. Quarterly adjusted loss was also way narrower than the year-ago quarter’s loss of $1.29 per share.
The company recorded revenues $420 million for the quarter, which is significantly higher than the revenues of $83 million posted in the year-ago quarter, when the COVID-19 pandemic caused disruptions in the global travel industry. This year-over-year surge in the top line reflects continued gradual recovery in global air, hotel and other bookings. Moreover, the top-line figure topped the Zacks Consensus Estimate of $403 million.
The Travel Solutions segment’s revenues increased to $373 million from the year-ago quarter’s $56 million, mainly on gradual recovery in global air and other bookings.
Distribution (sub-division of Travel Solutions) revenues improved to $218 million from the $48 million seen in second-quarter 2020, chiefly driven by favorable comparison of the prior-year quarter’s significant cancellation activities and gradual recovery in bookings.
IT Solutions (sub-division of Travel Solutions) revenues came in at $155 million, up from the year-ago quarter’s tally of $104 million. This increase was primarily driven by gradual recovery in passengers boarded. Number of boarded airline passengers, a key revenue metric for IT Solutions division, increased to 103.65 million from 19.8 million.
The Hospitality Solutions segment’s revenues totaled $51 million compared with the year-ago quarter’s $29 million. This upside was mainly fueled by the continued gradual recovery in central reservation system transactions and higher Digital Experience revenues.
The company reported an adjusted operating loss of $121.8 million, significantly narrower than the operating loss of $306.8 million posted in the year-earlier period.
Balance Sheet and Cash Flow
Sabre ended the first quarter with cash and cash equivalents of $1.12 billion compared with the previous quarter’s $1.28 billion.
During the quarter, the company used $141 million of cash for operational activities and generated negative free cash flow of $152 million. In the first-half of 2021, it used $338 million of cash for operational activities and generated negative free cash flow of $356 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Sabre has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
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 #4 (Sell). We expect a below average return from the stock in the next few months.