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LendingTree Displays Strong Organic Growth, High Costs a Woe
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LendingTree, Inc. (TREE - Free Report) displays steady prospects for revenue growth. While the bank’s strategic initiatives and low debt burden are anticipated to support bottom-line growth, escalating expenses remain concerns.
The Zacks Consensus Estimate for the current-year and next year earnings has remained unrevised over the past seven days. This is evident from the company’s Zacks Rank of 3 (Hold).
Further, the company’s price performance is impressive. Shares of LendingTree have gained 39.4% in the past three months compared with the industry’s growth of 26%.
LendingTree remains committed to boost revenues by diversifying its non-mortgage product offerings (72% of total revenues as of Mar 31, 2020). Over the last four years, the company 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 a period of three years (ended 2019), with the increasing trend continuing in first-quarter 2020.
LendingTree’s bottom line has benefited 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.
Amid the coronavirus crisis and its impact on economy, the company holds a debt level of $398 million and debt-capital ratio of 0.48 (compared with the industry average of 0.71), as of Mar 31, 2020. With a time-interest-earned ratio of 3.8X (increased over the past few quarters), we believe LendingTree carries a lower credit risk.
However, rising expenses remain a woe. Though expenses declined slightly in first-quarter 2020 on a year-over-year basis, LendingTree’s cost base has escalated significantly at a CAGR of 34.4% over a period of three years, ending 2019. The rising trend in expenses was due to persistent product development costs and advertising expenses.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 30 days’ time. Further, the company’s shares have rallied 4.4% over the past three months. At present, it carries a Zacks Rank of 2.
Mercantile Bank Corporation (MBWM - Free Report) has witnessed upward earnings estimate revisions for the ongoing year in the past 30 days. This Zacks #1 Ranked stock has depreciated 4.4% over the past three months.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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LendingTree Displays Strong Organic Growth, High Costs a Woe
LendingTree, Inc. (TREE - Free Report) displays steady prospects for revenue growth. While the bank’s strategic initiatives and low debt burden are anticipated to support bottom-line growth, escalating expenses remain concerns.
The Zacks Consensus Estimate for the current-year and next year earnings has remained unrevised over the past seven days. This is evident from the company’s Zacks Rank of 3 (Hold).
Further, the company’s price performance is impressive. Shares of LendingTree have gained 39.4% in the past three months compared with the industry’s growth of 26%.
LendingTree remains committed to boost revenues by diversifying its non-mortgage product offerings (72% of total revenues as of Mar 31, 2020). Over the last four years, the company 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 a period of three years (ended 2019), with the increasing trend continuing in first-quarter 2020.
LendingTree’s bottom line has benefited 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.
Amid the coronavirus crisis and its impact on economy, the company holds a debt level of $398 million and debt-capital ratio of 0.48 (compared with the industry average of 0.71), as of Mar 31, 2020. With a time-interest-earned ratio of 3.8X (increased over the past few quarters), we believe LendingTree carries a lower credit risk.
However, rising expenses remain a woe. Though expenses declined slightly in first-quarter 2020 on a year-over-year basis, LendingTree’s cost base has escalated significantly at a CAGR of 34.4% over a period of three years, ending 2019. The rising trend in expenses was due to persistent product development costs and advertising expenses.
Stocks to Consider
State Street Corporation (STT - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 30 days. Moreover, this Zacks #2 Ranked (Buy) stock has gained 24.7% over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 30 days’ time. Further, the company’s shares have rallied 4.4% over the past three months. At present, it carries a Zacks Rank of 2.
Mercantile Bank Corporation (MBWM - Free Report) has witnessed upward earnings estimate revisions for the ongoing year in the past 30 days. This Zacks #1 Ranked stock has depreciated 4.4% over the past three months.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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