Why Shares of Orbitz Worldwide, Inc. Skyrocketed

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 Orbitz Worldwide  (NYSE: OWW  ) were taking off today, gaining as much as 32% after the company turned in a better-than-expected fourth-quarter earnings report.

So what: The travel-accommodations website delivered per-share earnings of $0.05, better than estimates of breakeven, while revenues increased 4.1% to $197.4 million, also beating the consensus at $191.2 million. Sales in the quarter were boosted by its hotel division, which grew 18%, while airline ticket sales fell 11%. Orbitz and its competitors have been increasingly turning to hotel reservations to drive bottom-line growth as they're more profitable than airline tickets. The fourth quarter also tends to be a seasonally slow one for Orbitz, so investors seemed happy that the travel service was able to squeeze out a profit. CEO Barney Harford said he expected "strong growth" in 2014 and beyond.

Now what: Despite Harford's optimism, Orbitz's first-quarter guidance was actually off the mark at $202 million to $207 million against analyst estimates of $207 million. For the year, the company expects revenue growth in the low-to-mid single digits, in line with estimates of a 3.7% increase. Orbitz has been an especially volatile stock lately, having tripled in the past year but still off nearly 30% from its high this summer. The travel bookings industry is extremely competitive, and Orbitz seems to be stuck in the middle of the pack with slow top-line growth and slim profits. Even with today's bounce, I wouldn't expect shares to see that $12.62 high anytime soon. 

What stocks are really ready to soar?
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


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

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.

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: 2838344, ~/Articles/ArticleHandler.aspx, 10/1/2014 10:31:08 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...


Advertisement