I’ve written a bit about the online travel industry in the past and have traded a few of those names with Priceline (PCLN, Financial) being a personal favorite. That being said, I’ve also disclosed how much I like Tripadvisor (TRIP, Financial). Today, I wanted to take a deeper look at Travelzoo (TZOO, Financial) which has a fairly unique business compared to other players.
The main difference is that I think Travelzoo’s business is a nice mix between Priceline (PCLN) and Groupon (GRPN, Financial). It is able to provide local deals to the million of mailing list members that it has accumulated over the years. I do think that it is much more focused than Groupon (resulting in lower costs) and there are fewer questions regarding its accounting practices, etc. That has helped TZOO generate strong growth for many years now.
In other ways though, Travelzoo is able to provide web properties such as its Fly.com search engine that make it easier for users to search for a specific deal. It’s not quite the “Name Your Price” brand, but it is still very strong and getting better. From everything that I can tell, Travelzoo is a very well run company in a sector where growth continues to be strong.
Yyyy-stock price 5 years
Valuation Estimates
Depending on whose earnings per share estimates you use, the P/E estimates for 2012 and 2013 are close to 15 and 13. That is a fairly attractive valuation for a company that is expected to increase its revenues by double digits for the next few years at a minimum. The company has a very strong balance sheet with no debt and significant cash (close to $2.50 per share).
Yyyy-Revenue chart
Yyy-TZOO numbers
Economic Environment Challenges
No doubt, the fact that Travelzoo has a large portion of its business in the UK is a challenge as that economy continues to go through a weak recovery.
That being said, I think that what Travelzoo offers is fairly unique and difficult to replicate which will certainly continue to offer a lot of good opportunities for the company.
The main difference is that I think Travelzoo’s business is a nice mix between Priceline (PCLN) and Groupon (GRPN, Financial). It is able to provide local deals to the million of mailing list members that it has accumulated over the years. I do think that it is much more focused than Groupon (resulting in lower costs) and there are fewer questions regarding its accounting practices, etc. That has helped TZOO generate strong growth for many years now.
In other ways though, Travelzoo is able to provide web properties such as its Fly.com search engine that make it easier for users to search for a specific deal. It’s not quite the “Name Your Price” brand, but it is still very strong and getting better. From everything that I can tell, Travelzoo is a very well run company in a sector where growth continues to be strong.
Yyyy-stock price 5 years
Valuation Estimates
Depending on whose earnings per share estimates you use, the P/E estimates for 2012 and 2013 are close to 15 and 13. That is a fairly attractive valuation for a company that is expected to increase its revenues by double digits for the next few years at a minimum. The company has a very strong balance sheet with no debt and significant cash (close to $2.50 per share).
Yyyy-Revenue chart
Yyy-TZOO numbers
Economic Environment Challenges
No doubt, the fact that Travelzoo has a large portion of its business in the UK is a challenge as that economy continues to go through a weak recovery.
That being said, I think that what Travelzoo offers is fairly unique and difficult to replicate which will certainly continue to offer a lot of good opportunities for the company.
