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Why LendingTree, Inc. Stock Is Rocketing Today

By Jordan Wathen – Feb 25, 2016 at 1:13PM

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The online lending marketplace reported an impressive 512% increase in earnings year over year.

What: Shares of LendingTree (TREE 2.17%) are surging, rising by 18% as of 11:15 a.m. EST Thursday on the back of a better-than-expected earnings report.

So what: The online lending marketplace announced that it earned adjusted net income of $34.9 million in the fourth quarter, a 265% improvement over the sequential quarter, and a 512% improvement over the same quarter last year. That amounted to $2.69 in adjusted net income per share. This earnings measure is adjusted primarily for non-cash (stock-based) compensation.

The company also raised its guidance for the full year 2016. The table below shows the company's new guidance compared to prior guidance.


FY 2016 Guidance

Prior 2016 Guidance


$370-$380 million

$315-$320 million

Variable marketing margin

$129-$134 million

$108-$112 million

Adjusted EBITDA

$62-$65 million

$50-$52 million

Source: Company 8-K filing.

Non-mortgage products remain its most important revenue and earnings driver. The company disclosed that non-mortgage lending products generated $31.4 million in revenue in the fourth quarter, a remarkable 193% increase over the same period a year ago.

Now what: LendingTree is storming ahead with capital allocation plans that include continued repurchases of its stock. It disclosed that it deployed about $40 million repurchasing shares from a $50 million authorization approved on Jan. 14, 2016. Its board of directors approved another $40 million in repurchases.

LendingTree's CEO, Doug Lebda, noted that the company not only saw "year-over-year growth in every lending category, but several new offerings have proven to be significant revenue drivers." He added that "these results are proof that the LendingTree brand can be leveraged to successfully expand into new financial categories while growing our existing products."

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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