Why Interval Leisure Group Shares Dropped

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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: Shares of Interval Leisure Group (Nasdaq: IILG ) were getting left behind today, falling as much as 15% after a disappointing quarterly earnings report.

So what: Adjusted EPS of $0.19 a share matched estimates, while revenues grew 9.8% to $117 million, in line with expectations as well. GAAP net income was breakeven on account of early non-cash debt extinguishment, but adjusted earnings were actually slightly below last year's total. Free cash flow for the first nine months of the year is down nearly 20% from a year ago. The company made strong gains in its Management and Rental segment but took a hit on gross margins, which led to the negative bottom-line growth. CEO Craig Nash said the company was making strides in its efforts to "diversify its fee-for-service offerings."

Now what: Shares bounced back after hitting lows near the open. Investors may be expecting more of the timeshare and vacation-rental specialist, especially considering its P/E of 23. With no bottom-line growth and a projected revenue increase in the single digits in the coming quarters, investors can probably find better places to put their money.

Don't let any news get away from you. Add Interval Leisure Group to My Watchlist.

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