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Tree.com (TREE) Down 9.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Tree.com (TREE - Free Report) . Shares have lost about 9.8% in that time frame, underperforming the S&P 500.

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

LendingTree Q1 Earnings & Revenues Beat Estimates

LendingTree’s first-quarter 2024 adjusted net income per share of 70 cents beat the Zacks Consensus Estimate of 46 cents. The reported figure compares favorably with the 25 cents reported in the prior-year quarter.

The company’s results were aided by lower costs, while a decline in revenues was a spoilsport.

LendingTree reported net income of $1 million, down 92.6% from the year-ago quarter.

Revenues & Variable Marketing Margin Decline

Total revenues were down 16.3% year over year to $167.8 million in the first quarter. The downside stemmed from a decline in the Home and Consumer segments' revenues. Nonetheless, the reported figure surpassed the Zacks Consensus Estimate of $164 million.

The total cost of revenues was $8.5 million, down 37.9% from the previous year’s quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $21.6 million, up 49% year over year. The variable marketing margin was $69.4 million, down 8.8%.

As of Mar 31, 2024, cash and cash equivalents were $230.7 million compared with $150.1 million as of Mar 31, 2023. Long-term debt was $631.3 million compared with $625.4 million as of Mar 31, 2023.

Outlook

For the second quarter of 2024, total revenues are estimated between $175 million and $190 million. Adjusted EBITDA and the variable marketing margin are anticipated between $22-$26 million and $70-$76 million, respectively.

For 2024, total revenues are projected between $690 million and $720 million. Adjusted EBITDA is projected in the $85-$95 million band. The variable marketing margin is expected in the range of $280-$300 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 87.5% due to these changes.

VGM Scores

At this time, Tree.com has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tree.com has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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