It has been a great year for LendingTree (TREE 5.55%) shareholders; the stock gained 91% in the first half of 2019 compared to a 17% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
Investors had an inkling early on in the year that 2019 would be better than the prior year, which saw the financial services specialist underperform the wider market. But the company has dramatically outpaced those expectations so far.
Sales in the fiscal first quarter shot higher by 45% despite a 37% slump in LendingTree's mortgage-based products. That success confirmed that its recent moves into areas like credit card financing and insurance are making it a stronger business. "We're obviously thrilled with the great start to the year," CFO J. D. Moriarty told investors in late April.
Executives are targeting sales of around $265 million when the company announces fiscal second-quarter results over the next few weeks, which would mark another quarter of growth over 40%. Yet two key questions are whether LendingTree's new business lines will deliver sustainable profitability and whether the extra diversity can help it thrive through the next cyclical downturn in consumer borrowing.