Shares of LendingTree, Inc. (TREE 1.80%) stock plummeted as much as 18% in early Thursday trading before finding their footing and recovering some of their losses midday. As of 2 p.m. EDT, though, the stock was still down nearly 15% as investors objected to a Q3 earnings report featuring an earnings miss and a weak forecast for the rest of this year.
LendingTree reported 36% sales growth over Q3 2015, which sounds great, but Wall Street had hoped for more. The $94.6 million in revenue reaped during the quarter fell short of analysts' $96.9 million consensus estimate. Pro forma earnings of $0.80 per share likewise missed estimates of $0.83. GAAP earnings came in at $0.57 per share.
Management put a brave face on the results, with CEO Doug Lebda highlighting "record profitability along with year-over-year revenue growth," and "record revenue from non-mortgage products," which grew 60% year over year. Regardless, the earnings miss hzurt, and was made worse by the fact that GAAP earnings actually declined 3% year over year. It didn't help that management issued new guidance for full-year 2016, calling for revenues of $370 million to $375 million, roughly 3% below previous expectations.
With $52.2 million in trailing profits (per S&P Global Market Intelligence data) and a market capitalization of $1.08 billion, LendingTree stock currently sells for a price-to-earnings (P/E) ratio of just 20.6. Net out the company's $177 million in cash, with no debt, and the stock's ex-cash P/E ratio is an even more attractive 17.2.
With LendingTree growing revenues strongly in Q3 -- if perhaps not quite as strong as Wall Street had hoped -- and continuing to promise revenue growth in the mid-40s percentile for the year as a whole, LendingTree stock looks attractively priced after today's sell-off. Attractive, that is to say, if the company can succeed in growing profits at something approaching the rate at which it continues to grow revenue.
Whether it succeeds in that task, however, remains to be seen.