Why Travelzoo Could Be a Smart Short-Sell Opportunity Right Now
Travelzoo is a global online publisher of travel, entertainment, and lifestyle deals. They offer exclusive offers and one-of-a-kind experiences to their 30 million members worldwide. The company partners with over 5,000 top travel suppliers to provide these deals. Travelzoo also operates Jack’s Flight Club, which focuses on providing exceptional airfares and offsetting carbon emissions by planting trees.
Financial Performance and Ratios
As of Q3 2024, Travelzoo reported consolidated revenue of $20.1 million, a slight decrease from $20.6 million in Q3 2023. The company’s gross profit for Q3 2024 was $17.55 million, and the operating profit was $4.05 million. Net income for Q3 2024 was $3.26 million, or $0.26 per share. Travelzoo’s financial ratios include a P/E ratio of 19.02, a market cap of $231.6 million, and a 52-week high of $22.44.
Travelzoo Stock Price Performance
Travelzoo’s stock price has shown significant growth over the past year (TZOO:NASDAQ). As of December 16, 2024, the stock price was $19.62, with a 52-week high of $22.44 and a low of $7.12. The stock has outperformed the S&P 500, with a year-to-date return of 106.19% compared to the S&P 500’s 27.34%.
Investment Insight
The company isn’t a significant money generator, as General and Administrative expenses constitute a large portion of its Gross Profit. Despite this, the company’s Net Profitability indicators are relatively high, driven by a substantial Gross Margin. Market investors often value the shares due to the company’s share buybacks, which automatically boost Return on Equity (ROE). However, this isn’t the type of company that a Intelligent investor would typically prefer in their portfolio.
Travelzoo Stock Forecast**
| MIN/MAX | 2024 | 2025 | 2026 | 2027 | 2028 |
|---|---|---|---|---|---|
| MIN | 2.23 | 8.20 | 30.17 | 110.97 | – |
| MAX | 7.03 | 25.85 | 95.08 | 349.73 | – |
When to buy?
Currently, the stock price has reached its local highs, making it an opportune time to sell. For traders, this represents an ideal moment to engage in Short selling, capitalizing on the anticipated price correction.
Dividend Policy
Travelzoo does not currently pay dividends. The company focuses on reinvesting its earnings to grow the business and enhance shareholder value through stock price appreciation.
Conclusion
Travelzoo offers a unique value proposition with its exclusive travel and entertainment deals. Despite a high gross margin, the company’s profitability is somewhat limited by significant General and Administrative expenses. While its stock has performed well recently, it may not be the best choice for long-term, Intelligent investors due to its current valuation and expenditure structure.
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*Investment analysis involves scrutinizing over 50 different criteria to assess a company's ability to generate shareholder value. This comprehensive approach includes tracking revenue, profit, equity dynamics, dividend payments, cash flow, debt and financial management, stock price trends, bankruptcy risk, F-Score, and more. These metrics are consolidated into a straightforward Investment Scoreboard, which effectively helps predict future stock price movements.
**Use the price forecast to manage the risk of your investments.