Travelzoo, Inc. (NASDAQ:TZOO)

Overvalued, I would short.

Either Groupon Or Travelzoo will be selling the discounted unused inventory of vacation plans. I cannot think of any other channel for the discounted unused inventory.

High volume triple top breakout 01/24/13

Magic Formula 11-29-12

Huge short interest plus best deals model execution. Will likely be sold in the near future and the acknowledgement of this alone will drive the price substantially higher.

Travelzoo's unique core business, its evolving PROFITABLE deals business and cheap valuation relative to its earnings makes it an attractive takeover target. The perpetually high short interest makes it for an attractive short squeeze candidate.

Crowded space + small company + no barriers to entry = Take the money and run

Strong free cash flow and a low stock price tell me this one doesn't deserve its two-star rating. In fact, you should probably go ahead and double that. TZOO is a buy.

over sold

just ended a big losing outperform pick in TZOO, i didn't like this biz but followed the herd. another reminder to at least consider your gut, if not listen outright. still don't like the companies prospects but am starting another green thumb on pure speculation of buyout.

Valuation by sales multiple (2.54x sales) makes this stock very cheap when compared to Google (9.89). However one of the most important indicators of value in the dela space is reveneue per subscriber. Groupons $8.32 is greater than TZOO's $6.58. this does not however justify a valuation based on sales of 10x vs 2.54x. Of course both could be overvalued here as well!

My first attempt to put TZOO on Caps didn't fare so well. Sales were growing rapidly, but that has slowed. The PE was way too high once sales started to slow. So I ended my Caps for TZOO at a big loss.

I am reupping today because at a price of $26.83. I think this better reflects their value. The PE on an adjusted earnings is 25.31. I don't think that is too bad considering they are now reporting accelerated growth.

Conclusion:

Its always disappointing when the price of a stock crashes. And in the case of TZOO, it was probably more of a valuation issue than any other reason. Also, GAAP earnings of $0.20 for the full year may have scared people, but the reason it is so low is because of tax settlement payment to the state of Delaware. It costs them $0.86 for the quarter crushing the first quarter earnings and full year earnings. That was a one-time event and needed to be removed from TTM earnings.

The Company said non-gaap earnings was a $1.42 and that is my figure too if we make no further adjustments, but I feel we have to make a $600,000 tax benefit adjustment for the fourth quarter. I am comfortable with my $1.06 earnings until I read the 10k.

At $1.06, the PE is 25.30. I may have over adjusted earnings, but I prefer to be a bit more conservative. Analysts expect them to make $1.64 in 2012 and $1.93 in 2013, but I don’t know whether they are using their own version of GAAP/non-GAAP earnings, so these estimates may not mean very much.

The last quarter did show revenues up 23.4% and that is accelerated growth from the previous year. Last year, fourth quarter revenues grew 19.7%. The fourth quarter tends to be a weaker quarter for them, so the next quarter should be very interesting as it should be stronger.

I own it at higher prices, but I feel the present price now reflects good value. They may not have deserved selling at $103, but I think the price has been overly punished. They are a small cap company and they wouldn’t need much growth next year to justify today’s price. If they can grow earnings, from my adjusted $1.06 by 20% for the next two years, I think the price is cheap. The earnings would be $1.53, the forward PE 17.65. They are growing sales faster than 20%. I may have been too conservative adjusting for earnings and their growth in Europe looks very promising. They have other parts of the world in which to expand too.

The low for first quarter was $20.68. The adjuste PE is 19.51. That I think would be an amazing price, if it fell to that point again. But I doubt if it will so, I am placing it on my caps today. I will be looking for that value point in the future for my own portfolio purchases.

They are moving into the Local Deal space, they already offer great travel deals. And they will have a simple entry point as they have already developed an extensive email distribution list.
They would be a great outlet for LivingSocial or Groupon to post deals to reach their users, much like Amazon did with LivingSocial for a while.

TM says it's undervalued and Wall Street doesn't understand the industry. Tzoo will change a lot in next 12 months, numbers are misunderstood from a glance.

travelzoo has dropped way too much due to shorting over its bad quarterly earnings, this company has great potential and a great price, which will lead to more buying, and therefor also more price growing

This stock has no dominant market niche and few barriers to entry. The TZOO price has been elevated by the small float and large number of shorts. In the last three years margins have coninued to erode and the PE is stratospheric. A better bet is EXPE or PCLN as well a numerous travel industry stocks. Insiders have ben dumping large numbers of shares. I believe that if options were available that would have an effect in normalising the share price to about $15-20

I read the stars.....

Just that this stock is super undervalued only because of the market, I personally feel that this stock will come back slowly not in huge clumps.

Growing Revenue and Earning in this environment is a premium.