1-Star Stocks Poised to Plunge: Travelzoo?

• Report this Comment On June 02, 2011, at 10:53 AM, JehovaJira wrote:

  I think P/E ratios and other similar kinds of metrics comparing price or enterprise value to operational metrics can sometimes be misleading. Hi P/E ratios could merely represent the attractiveness of the stock to potential investors relative to the size of the float (the amount of stock available for sale).

  The float size relative to the demand may be partly responsible for the TZOO P/E ratio. 66% of the total stock is held by management, and 44% of the remaining stock is held by mutual funds. In addition, the number of funds owning shares in the stock has grown consistently from Jun-09 through the most recently available quarterly statistics. While has not yet reached profitability, its earnings per share growth has remained above 100% for the past four quarters.

  I also want to point out that investors can grow rich by seeing opportunity for growth where other more conservative investors see the opportunity for loss of capital. Of course, it always help when you buy at the right value. For example, buying TZOO at 75.66 on May 12 was not a good idea in the short run, but those who bought TZOO at 63.20 on May 17 may be congratulating themselves on their good position. My personal view, unlike about 43% of Motely Fool Caps, is that both positions will be profitable shortly.

• Report this Comment On June 02, 2011, at 12:01 PM, scott1020 wrote:

  The two examples used to support negative sentiment in TZOO are very poor. Travelzoo has been profitable the previous 4 quarters prior to Q1's earnings. And that loss was attributable to a settlement that has been an outstanding issue soon after the company's inception. On a more important note, cash flow was positive and was higher than the last 5 quarters, probably the highest ever. TZOO has limited financial liabilities and strong potential upside for revenue growth. The company definitely trades at a premium, but not comparative to p/e ratios. There are many companies trading much more egregiously. It is more expensive from a price/book value or market cap or enterprise value/sales perspective.

  This article is biased. TMF and caps investors in general do not offer much for a serious investor, just a gossip show.

• Report this Comment On June 03, 2011, at 9:28 AM, johnvanjohn wrote:

  Tzoo has a great infrastructure not only in the USA but in Europe also. It is a well managed company that keeps its costs in line....Example. Groupon has over 7000 employees and spends 35% of its revenue on advertising.

  Tzoo has first rate deals..try and book one ! most get sold out in a day or so.

• Report this Comment On June 04, 2011, at 9:16 PM, edenVchen wrote:

  this is ridiculous hahaha, comparing their 1 yr forward p/e to expe, goog, and pcln is like comparing msft with netsuite... look at operating margin expansion, rev growth and travelzoo's expansion in europe. These people saying that tzoo will not succeed or the same people that could not understand why pcln did so well.

  you must understand the company if you want to analyze, not just look @ multiples

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