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Here's Why You Should Hold on to LendingTree (TREE) at Present
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LendingTree, Inc.’s (TREE - Free Report) efforts to increase non-mortgage product offerings will support revenue growth. A flexible business model and diversified solutions for a wider array of lenders are expected to aid the Home segment amid a high interest rate environment. Yet, elevated costs are expected to hurt its financials. A decline in the insurance segment’s revenues will impede the top line.
TREE is committed to boosting revenues by diversifying its non-mortgage product offerings, particularly in the Consumer segment. Over the past years, the company has increased its services, such as credit cards, and widened loan offerings to personal, auto, small business and student loans.
The Consumer segment’s revenues witnessed a compound annual growth rate (CAGR) of 7.5% over the last five years (ended 2022). However, the trend reversed in the first nine months of 2023. Nonetheless, LendingTree’s initiatives, including SPRING (previously MyLendingTree) and TreeQual, are likely to improve cross-selling opportunities with existing customers, thus driving profitability.
LendingTree’s Home segment’s revenues (consisting of Home Equity revenues and mortgage revenues) saw a CAGR of 1.4% over the last three years (ending 2022). The trend reversed in the first nine months of 2023. The company is focusing on improving purchase conversion rates, while assisting in meeting its customers’ demands for home equity loans.
LendingTree’s market-leading position and flexible business model, which provide more diversified solutions for a wider array of lenders, will enable it to navigate through fluctuating macroeconomic situations and high interest rate environments.
Over the past few years, the company has enhanced its credit services and credit card product offerings, along with strengthening its online lending platform through acquisitions. Therefore, strategic initiatives will likely support bottom-line growth.
LendingTree showcased moderate revenue growth in its Insurance segment, witnessing a CAGR of 1.6% over the past three years (ended 2022). However, the trend declined in the first nine months of 2023. Given the weakness in personal auto loans, reduced marketing spend by partners and overall worsening operating backdrop, the company expects subdued demand.
LendingTree’s cost base has risen, seeing a four-year (2018-2022) CAGR of 9.5%. Nonetheless, the trend reversed in the first nine months of 2023 on cost-containment efforts, including headcount reduction and elimination of low-returning businesses. The normalization of business activities will likely increase technology and advertisement expenses. This might affect bottom-line growth in the long term.
As of Sep 30, 2023, LendingTree’s cash and cash equivalents were $175.6 million, which compare unfavorably with the long-term debt of $625.7 million on its balance sheet. Hence, the company’s capital distribution activities remain apprehensive.
Over the past six months, shares of TREE have declined 15.7% against the industry’s rise of 3.6%.
A couple of better-ranked stocks from the finance space are UMB Financial (UMBF - Free Report) and Peoples Bancorp (PEBO - Free Report) .
UMBF’s current-year earnings estimates have been revised 3.2% upward over the past 30 days. Its shares have gained 19.8% over the past six months. The company currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for PEBO’s current-year earnings has been revised 1.9% downward over the past month. Over the past six months, its share price has increased 20%. The company currently carries a Zacks Rank of 2.
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Here's Why You Should Hold on to LendingTree (TREE) at Present
LendingTree, Inc.’s (TREE - Free Report) efforts to increase non-mortgage product offerings will support revenue growth. A flexible business model and diversified solutions for a wider array of lenders are expected to aid the Home segment amid a high interest rate environment. Yet, elevated costs are expected to hurt its financials. A decline in the insurance segment’s revenues will impede the top line.
TREE is committed to boosting revenues by diversifying its non-mortgage product offerings, particularly in the Consumer segment. Over the past years, the company has increased its services, such as credit cards, and widened loan offerings to personal, auto, small business and student loans.
The Consumer segment’s revenues witnessed a compound annual growth rate (CAGR) of 7.5% over the last five years (ended 2022). However, the trend reversed in the first nine months of 2023. Nonetheless, LendingTree’s initiatives, including SPRING (previously MyLendingTree) and TreeQual, are likely to improve cross-selling opportunities with existing customers, thus driving profitability.
LendingTree’s Home segment’s revenues (consisting of Home Equity revenues and mortgage revenues) saw a CAGR of 1.4% over the last three years (ending 2022). The trend reversed in the first nine months of 2023. The company is focusing on improving purchase conversion rates, while assisting in meeting its customers’ demands for home equity loans.
LendingTree’s market-leading position and flexible business model, which provide more diversified solutions for a wider array of lenders, will enable it to navigate through fluctuating macroeconomic situations and high interest rate environments.
Over the past few years, the company has enhanced its credit services and credit card product offerings, along with strengthening its online lending platform through acquisitions. Therefore, strategic initiatives will likely support bottom-line growth.
LendingTree showcased moderate revenue growth in its Insurance segment, witnessing a CAGR of 1.6% over the past three years (ended 2022). However, the trend declined in the first nine months of 2023. Given the weakness in personal auto loans, reduced marketing spend by partners and overall worsening operating backdrop, the company expects subdued demand.
LendingTree’s cost base has risen, seeing a four-year (2018-2022) CAGR of 9.5%. Nonetheless, the trend reversed in the first nine months of 2023 on cost-containment efforts, including headcount reduction and elimination of low-returning businesses. The normalization of business activities will likely increase technology and advertisement expenses. This might affect bottom-line growth in the long term.
As of Sep 30, 2023, LendingTree’s cash and cash equivalents were $175.6 million, which compare unfavorably with the long-term debt of $625.7 million on its balance sheet. Hence, the company’s capital distribution activities remain apprehensive.
Over the past six months, shares of TREE have declined 15.7% against the industry’s rise of 3.6%.
Image Source: Zacks Investment Research
Currently, TREE carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Finance Stocks Worth Considering
A couple of better-ranked stocks from the finance space are UMB Financial (UMBF - Free Report) and Peoples Bancorp (PEBO - Free Report) .
UMBF’s current-year earnings estimates have been revised 3.2% upward over the past 30 days. Its shares have gained 19.8% over the past six months. The company currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for PEBO’s current-year earnings has been revised 1.9% downward over the past month. Over the past six months, its share price has increased 20%. The company currently carries a Zacks Rank of 2.