Travelzoo Inc. (TZOO): Has this Online Travel Company Turned the Page?

Page 1 of 2

Travelzoo Inc. (NASDAQ:TZOO)In the past, I have been highly critical of both Travelzoo Inc. (NASDAQ:TZOO) the company and also its management. This stemmed from what I believe was a period of misleading investors complemented with strong insider selling back in its glory days of 2011. However, after another strong quarter, I think Travelzoo Inc. (NASDAQ:TZOO) might have turned the page.

Back in January, I wrote an article titled “Management Matters: Be Careful Investing in these Companies,” which included Trazelzoo and its one-day gains of 24% after posting Q4 earnings. My point was that earnings weren’t that good, and that investors should remember the past when director Ralph Bartel sold almost 2.5 million shares for an average price of more than $75.00 while other executives “pumped” the stock. The truth was that Bartel was smart, as Travelzoo Inc. (NASDAQ:TZOO) had no business trading at such inflated prices. But my point was to view optimism surrounding this company with a glass-half-empty mentality.

Travelzoo Then and Now

At $75 per share, Travelzoo was trading with a market cap of $1.1 billion; today its market cap is $375 million. At $1.1 billion, the company was seeing top line growth of roughly 30% and was trading with a price/sales ratio of about 10.0. Furthermore, the stock had a P/E ratio in triple digits. Today, the metrics are much more favorable: The stock trades with a price/sales below 2.50 and has a P/E ratio of 21.50.

After a year of flat trading, Travelzoo Inc. (NASDAQ:TZOO) now appears to be fairly valued, and has rallied 28% in 2013. For its most recent quarter the company saw revenue growth of 7%, net income growth of 49%, strong growth in both North America and Europe, and subscriber growth of 5% year-over-year.

When you think of the fast-growing booming internet company space, including the likes of Yelp and Zillow, Travelzoo appears to be growing slow. In fact, even when compared to its industry with companies such as Expedia Inc (NASDAQ:EXPE) and Priceline.com Inc (NASDAQ:PCLN), it appears to be growing slow. But Travelzoo is different — first off its business model includes the sale of travel packages, not necessarily flights and hotels. Yet with sales of less than $200 million there is a lot of room for growth.

Travelzoo Compared to its Industry

What I like about Travelzoo Inc. (NASDAQ:TZOO) is that the company is growing, although slowly, and is fairly valued. From an investment perspective I consider it to be better than Priceline.com Inc (NASDAQ:PCLN) but worse than Expedia.

Travelzoo Priceline Expedia
1.Market Cap (millions) $375 $34,690 $8,380
2.P/E Ratio 21.50 25.15 30.96
3.PEG Ratio 0.96 0.99 1.39
4.Price/Sales 2.47 6.54 2.03
5.Operating Margin 18.85% 35.16% 13.57%

1. One of my knocks on Priceline is its size. The online travel industry has very few barriers to entry and Priceline commands the largest piece of the pie. Granted there is a large global market; I think Priceline.com Inc (NASDAQ:PCLN)’s size actually weighs in the favor of Expedia and especially Travelzoo in terms of upside.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!