Amid coronavirus pandemic, adding LendingTree, Inc. (TREE - Free Report) stock to your portfolio now seems to be a wise idea, given its robust fundamentals and solid growth prospects. Also, its earnings and revenue growth prospects are impressive.
This Zacks Rank #2 (Buy) stock has depreciated 35.9%, in the last six months, compared with the industry’s decline of 46.7%.
The company has been witnessing downward estimate revisions, reflecting analysts’ concerns about its earnings growth potential in the current economic scenario. Over the past 30 days, the Zacks Consensus Estimate for 2020 earnings has displayed a downward trend.
Why is LendingTree an Attractive Buy Right Now?
Revenue Strength: The company has been witnessing continued top-line improvement. In the last four years, LendingTree has increased its services, such as credit cards and widened loan offerings to personal, auto, small business and student loans. Therefore, non-mortgage revenues (consumer and insurance) witnessed a CAGR of 72.9% over the three-year period (ended 2019).
This upward trend is expected to continue in 2020 as well, at a growth rate of 12.9%, supported by the company’s strategy of diversifying its non-mortgage product offerings (75% of total revenues as of Dec 31, 2019).
Earnings per Share Growth: LendingTree recorded an earnings growth rate of 6.5% over the last three to five years. Retaining the momentum, its long-term earnings growth rate is anticipated to be 24.79%. Further, the company’s current-year earnings are projected to increase 19% compared with the industry’s average of 3.3%.
The company has a Growth Score of A. Our research shows that stocks with the combination of a Style Score of A or B, and a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Strategic Moves: LendingTree’s bottom line has been benefiting from its acquisition spree. Over the past few years, the company has enhanced its credit services and credit-card product offerings, along with strengthening the online lending platform through acquisitions. Since 2016, the company has completed 10 deals for a total consideration value of just more than $1 billion, including potential earnouts.
Steady Capital-Deployment Activities: The company remains committed to enhancing shareholders’ value. Notably, in both February 2018 and February 2019, the board of directors announced common stock-repurchase programs of up to $100 million and $150 million, respectively.
Superior Return on Equity (ROE): LendingTree’s ROE of 13.08%, compared with the industry’s 12.98% average, highlights the company’s commendable position over its peers.
Strong Leverage: LendingTree’s debt/equity ratio is 0.66 compared with the industry average of 0.98, displaying a relatively lower debt burden. It highlights the company’s financial stability even in an unstable economic environment.
Other Stocks to Consider
Meridian Bancorp, Inc. (EBSB - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 60 days. Also, this Zacks #1 Ranked (Strong Buy) stock has plunged 43% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Waterstone Financial, Inc.’s (WSBF - Free Report) ongoing-year earnings estimate moved up in the past 60 days. Further, the company’s shares have declined 21.3% over the past six months. At present, it carries a Zacks Rank of 2 (Buy).
Evercore Inc’s (EVR - Free Report) current-year earnings estimate moved north in 60 days’ time. Additionally, the stock has depreciated 28.3% over the past six months. It currently carries a Zacks Rank #2.
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