Shares of LendingTree (TREE - Free Report) stupendously gained 24.2% following the release of its third-quarter 2018 results. The company reported adjusted net income per share of $1.92, surpassing the Zacks Consensus Estimate of $1.78. The figure compares favorably with the prior-year quarter’s tally of $1.17.
The company’s results primarily benefited from higher revenues, with major contribution from non-mortgage products revenues. Also, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed impressive growth. However, flaring up expenses was a major headwind.
The company reported GAAP net income of $28.4 million or $2.05 per share compared with $10.1 million or 74 cents in the year-ago quarter.
Rise in Revenues Partially Offset by Higher Expenses
Total revenues grew 15% year over year to $197.1 million. The rise primarily stemmed from higher non-mortgage product revenues. However, it lagged the Zacks Consensus estimate of $200.1 million.
Total costs and expenses were $176.8 million, up 14.8% from the prior-year quarter. This upswing primarily resulted from rise in almost all components of cost. However, lower litigation settlements and contingencies was a mitigating factor amid rise of all expenses.
Adjusted EBITDA totaled $45.3 million, up 31% from $34.7 million reported in the prior-year quarter.
As of Sep 30, 2018, cash and cash equivalents were $265.2 million, down nearly 28.1% from Dec 31, 2017. Long-term debt climbed 4% from the year-end to $247.7 million. Total shareholders' equity was $376.5 million, up 27.7% from the Dec 31, 2017 level.
Capital Deployment Activity
During the reported quarter, the company repurchased 49,000 shares of its common stock at a weighted-average price of $230 per share for a total cost of $11.2 million.
Concurrent with the third-quarter results, including two months' impact from the QuoteWizard acquisition, management provided revised full-year 2018 estimates.
• Total revenues of $765-$775 million, up from the previous projection of $745-$765 million.
• Adjusted EBITDA in the $152-$155 million band, up from the previous projection of $148-$152 million. This represents growth of 32-35% year over year.
• Variable Marketing Margin is projected at $283-$288 million, up from the prior estimate of $275-$285 million.
Lending Tree put up an impressive performance during the Jul-Sep period. The company’s expansion strategy for its non-mortgage business seems to be working well, mirrored by the continued rise in its non mortgage revenues. Also, LendingTree’s commitment to diversify product offerings beyond mortgage-related products augurs well for the long term.
Nevertheless, escalating expenses remain a concern.
Currently, LendingTree carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other stocks in the same industry, TPG Specialty Lending, Inc. (TSLX - Free Report) is scheduled to release third-quarter earnings on Nov 6, while Ellington Financial LLC (EFC - Free Report) and Essent Group Ltd. (ESNT - Free Report) will release their quarterly numbers on Nov 7 and Nov 9, respectively.
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