Want to fill your email box with flames? Write about Travelzoo's (NASDAQ:TZOO) high valuation, its failure to meet analysts' earnings projections, and those pesky visits from the SEC. I've done that and have the flames to prove it.

Well, my email box is asbestos-lined and ready for the next onslaught -- but let me put this good news right up front. If you loved the stock at the day's high of $89.80 when I wrote about it in November, or the $66.04 high it reached when I revisited it in January, you should love it now. It's currently at $37.52, down almost 19% today.

On the surface, today's first-quarter financial news is upbeat. Revenue increased 74%, and net income soared 82%. You are not going to see those kinds of numbers from heavyweights like Microsoft and Intel.

You do not need rose-colored glasses to see strong improvements, either. For example, operating margins increased from 26.5% in last year's comparable quarter to 30.4% this year. Profit margins are great, too, having increased from 15.6% to 16.3%. Heck, even Wall Street darling Google (NASDAQ:GOOG) -- another company with an Internet business model -- has profit margins of only 12.5% (which are quite good).

Travelzoo's latest annual report shows another significant improvement, too. The company's largest customer accounted for 12% of revenue, and no other customers reached 10% or more. That's a big improvement from 2002, when the two largest clients accounted for 29% of total sales. That mutes the old concern that the company could have a significant sales hit if a key vendor departed.

Two concerns that do remain are Yahoo! (NASDAQ:YHOO) and Time Warner's (NYSE:TWX) AOL. They, and others too, have every reason to want more of Travelzoo's market. Given the brand-name recognition/equity such names carry, it makes perfect sense for airlines, hotels, and others to hope to partner.

Before today's earnings announcement, analysts were expecting the company to earn $0.63 a share -- almost double 2004's earnings. Even after today's huge percentage loss, the stock is still trading at roughly 60 times forward earnings. That's rich in virtually any market.

I have said it before, and I will say it again: Where is the competitive advantage that enables long-term business viability? Today's success is great -- but it isn't worth 60 times earnings. The best advice continues to be to watch out.

Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.