Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Travelzoo Finally Stops Feeding the Bears

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Travelzoo (Nasdaq: TZOO  ) may not be much of a top-line growth story these days, but check out those margins!

Shares of the travel deals publisher opened 7% higher yesterday -- but closed lower -- after posting blowout bottom-line results.

The company behind the popular Travelzoo Top 20 weekly list of sponsored getaway bargains put out a mixed second-quarter report. Revenue climbed a mere 5% to $39.4 million during the past three months, short of the 7% spurt that analysts were targeting.

However, operating margins of 26% -- Travelzoo's healthiest showing there in five years -- resulted in profitability surging 48% to $0.45 a share. Wall Street figured that Travelzoo's net income would clock in at only $0.41 a share.

A miss on the top and a beat on the bottom can sometimes send a stock lower, but Travelzoo has been beaten down so badly over the past year that a mere exhale is enough to initially push the stock higher. Gravity kicked in later in the day.

There are now 22.1 million opt-in subscribers for Travelzoo's digital missives through North America and Europe. Growth is slowing, particularly closer to home where North American revenue has posted back-to-back quarters of 4% revenue growth. However, the company's international business has been profitable over the past year, and margins are improving both here and abroad.

A couple of years ago, Travelzoo was one of the faster-growing players in online travel. These days only Orbitz Worldwide (NYSE: OWW  ) is growing slower. Despite the calamity in Europe and general cautiousness everywhere else, travel portal leaders (Nasdaq: PCLN  ) and Expedia (Nasdaq: EXPE  ) are both expected to post double-digit growth in revenue this year. 

Then again, if we approach Travelzoo as a provider of online deals, it's been profitable for far longer than niche leader Groupon (Nasdaq: GRPN  ) , which only recently began generating positive earnings.

Travelzoo shares spiked earlier this year on reports that it was seeking to be acquired. Nothing materialized on that front, but at least the company's healthy operational improvement will give it the flexibility to be pickier if potential buyers do come around. The dot-com pioneer continues to be the surprising leader of its niche. It would just be more comforting for investors to see that niche actually growing at a headier clip for Travelzoo.

Around the world
Travelzoo helps thrifty travelers become globetrotters, but some companies are doing the same thing by expanding their successful stateside businesses overseas. A new report details the three U.S. companies set to dominate the world. It's totally free, but you don't want it to leave the country without you, so check it out now.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Travelzoo. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of Motley Fool newsletter services have recommended buying shares of Travelzoo and The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1951122, ~/Articles/ArticleHandler.aspx, 10/24/2016 2:32:11 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,221.45 75.74 0.42%
S&P 500 2,150.36 9.20 0.43%
NASD 5,303.94 46.54 0.89%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 2:16 PM
EXPE $127.60 Up +0.02 +0.02%
Expedia CAPS Rating: ***
GRPN $5.18 Up +0.16 +3.09%
Groupon CAPS Rating: *
OWW.DL $0.00 Down +0.00 +0.00%
Orbitz Worldwide CAPS Rating: *
PCLN $1468.62 Up +1.23 +0.08%
Priceline Group CAPS Rating: ****
TZOO $12.15 Up +0.15 +1.25%
Travelzoo CAPS Rating: **