I'm accustomed to writing about a stock, buying it for my portfolio, and then promptly seeing its price trend downward. As a buy-and-hold investor, that isn't too big of a deal. But let's be honest: Who doesn't like immediate positive feedback?
With that in mind, I was pleasantly surprised to see last week's earnings release from Travelzoo
First, the cold, hard numbers
While investors were probably more focused on the 10% revenue and 32% earnings beats, a look at how Travelzoo has been faring year on year paints just as rosy of a picture.
|
Metric |
First Quarter, 2010 |
First Quarter, 2011 |
Change |
|---|---|---|---|
| Revenue | $28,520 | $37,000 | 30% |
| Non-GAAP EPS | $0.15 | $0.37 | 147% |
| Subscribers | 17.8 million | 19.9 million | 12% |
Revenue and earnings in thousands.
Local deals
Travelzoo already differentiates itself from better-known travel portals such as priceline.com
How are things going for what Travelzoo dubs "Local Deals"? Well, check out the chart below and you'll see that the initial foray has been a success.
|
Quarter |
Markets |
Gross Revenue |
|---|---|---|
| Q3 2010 | 12 | $800 |
| Q4 2010 | 30 | $8,000 |
| Q1 2011 | 48 | $16,200 |
Gross revenue in thousands.
In the company's most optimistic outlook, it sees Local Deals entering 200 markets, serving 30 million subscribers, and bringing in $780 million annually, a 12-fold increase from today.
Foolish takeaway
Make no mistake about it, Travelzoo is not cheap. Shares are currently trading at around 86 times the past year's adjusted earnings. You may get a chance to buy the company on the cheap in the future, but then again, you may not.
With adjusted earnings having grown 147% last quarter, an excellent management team that has the company firing on all cylinders, and the possibility for a buyout still within the realm of reason -- Google
Not sure whether you're sold on the Travelzoo growth story? Add the company to your Watchlist to keep tabs on it.
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