TravelZoo Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: TravelZoo (Nasdaq: TZOO  ) dropped 10% in intraday trading today after competitor Priceline.com (Nasdaq: PCLN  ) announced far, far better than expected earnings and guidance.

So what: Priceline reported non-GAAP EPS of $5.49, trouncing the consensus estimate of $4.91. Management guided Priceline's non-GAAP EPS for the current quarter to $9.10 to $9.30, well above the $7.98 consensus estimate.

Now what: What a difference from TravelZoo's July 21 earnings report, when EPS of $0.30 badly missed the consensus estimate of $0.39. TravelZoo's revenue grew 34% year over year, well below Priceline's revenue growth of 44% year over year. That suggests that Priceline is taking market share. What's more, TravelZoo's disappointing results probably kept expectations low going into Priceline's earnings report.

Interested in more info on TZOO? Add it to your watchlist.

Fool contributor Cindy Johnson owns no shares of any company named above. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 05, 2011, at 6:18 PM, stock2196 wrote:

    "That suggests that Priceline is taking market share",

    your inference is that Travelzoo is losing market share to Priceline. How do you come to this conclusion if Travelzoo's revenue rose 34%? Travelzoo derives the majority of their revenue through Local Deals now which consist of discounted spa, restaurant, hotel, and entertainment deals that come via email and are generally impulse purchases. Priceline's business is mainly hotel bookings from people using bid purchases. One can make a case that they are not even in the same market.

  • Report this Comment On August 05, 2011, at 7:46 PM, cissyeyes wrote:

    The vacation deals on travelzoo are always cheaper than those on priceline. Travelzoo can attract a lot more customers who want travel packages.

  • Report this Comment On August 05, 2011, at 8:50 PM, jimmy4040 wrote:

    I'm going to go against the grain here and say that TZOO is probably a poor Rule Breaker. Ultimately it's just a coupon operation dressed for the prom.

    For all of this year, and even into last year the valuations on RB picks have been excessive at recommendation time this probably no more egregious than most. I always thought of RB stocks as being for the long haul, but in the last 8-12 months, they have been much more along the lines of topical momentum stocks. High flyers and then crash and burn.

    I'm not selling many of my long time RB picks, but I don't jump into them automatically like I used to. CCSC was a real eye opener for me in that regard.

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