Travelzoo (TZOO) AI Stock Analysis

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Travelzoo

(NASDAQ:TZOO)

66Neutral

Travelzoo demonstrates strong financial performance in terms of profitability and cash flow, which is counterbalanced by concerns regarding its negative equity. The technical indicators point to a bearish trend, but potential reversal opportunities exist. The company's valuation appears attractive due to its low P/E ratio, but the absence of a dividend might limit investor appeal. The earnings call presents a cautiously optimistic outlook, with initiatives expected to drive future growth despite some regional challenges.

Positive Factors

Profitability

Efforts to control costs have led to improved margins and stronger profits.

Share Repurchase

Travelzoo has been active in repurchasing shares, buying back $18.9 million in stock in 2024, indicating a strong commitment to increasing shareholder value.

Subscription Service Transition

The company is transitioning to a subscription service, which is expected to drive meaningful revenue growth in 2025.

Negative Factors

Business Model Transition Uncertainty

There is meaningful uncertainty created by the shift in its model to prioritize a subscription-based service.

Geopolitical and Market Challenges

There are concerns about consumer price sensitivity and geopolitical challenges affecting advertiser sentiment.

Revenue Performance

Fourth quarter revenues of $20.8 million were below estimates and below the year-ago level, with management having expected growth in the period.

Travelzoo (TZOO) vs. S&P 500 (SPY)

Market Cap

$140.56M

Dividend YieldN/A

Average Volume (3M)115.95K

Price to Earnings (P/E)11.9

Beta (1Y)0.69

Revenue Growth-0.68%

EPS Growth34.16%

CountryUS

Employees227

SectorCommunication Services

Sector Strength79

IndustryAdvertising Agencies

Share Statistics

EPS (TTM)1.05

Shares Outstanding11,245,137

10 Day Avg. Volume106,010

30 Day Avg. Volume115,947

Financial Highlights & Ratios

PEG Ratio0.35

Price to Book (P/B)N/A

Price to Sales (P/S)1.83

Price to Cash Flow (P/CF)4.90

P/FCF Ratio4.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$20.50

Price Target Upside64.00% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Travelzoo Business Overview & Revenue Model

Company DescriptionTravelzoo (TZOO) is a global internet media company that publishes exclusive travel, entertainment, and local deals from over 5,000 travel, entertainment, and local companies. The company serves more than 30 million members worldwide, providing them with high-quality travel deals and experiences via its website, newsletters, and mobile applications. Travelzoo operates in the travel and leisure sectors, focusing on delivering curated offers that provide exceptional value to its members.

How the Company Makes MoneyTravelzoo generates revenue primarily through advertising fees paid by travel, entertainment, and local businesses that wish to promote their offers to Travelzoo's extensive member base. The company's key revenue streams include listing fees charged to businesses for featuring their deals in Travelzoo's publications and performance-based fees that depend on the success of the promotions. Additionally, Travelzoo leverages partnerships with airlines, hotels, cruise lines, and local businesses to secure exclusive deals that attract users. These partnerships are significant contributors to Travelzoo's earnings, as they enhance the value proposition for its members and drive engagement across its platforms.

Travelzoo Financial Statement Overview

Summary

Travelzoo shows strong profitability and cash flow performance, with efficient cost and cash management. However, the negative equity on the balance sheet raises concerns about financial stability, despite a slight revenue decline.

Income Statement

Positive

Travelzoo's income statement reveals a strong gross profit margin of 87.5% for TTM, indicating efficient cost management. The company shows a solid net profit margin of 16.1% for TTM, reflective of profitability. While the revenue has slightly decreased by 0.68% from the previous year, the EBIT and EBITDA margins have improved to 22.0% and 22.7% respectively, showcasing enhanced operational efficiency.

Balance Sheet

Neutral

The balance sheet highlights a concerning negative stockholders' equity of -$462,000, raising red flags about financial stability. Despite a reasonable debt-to-equity ratio in the past, the current negative equity skews this metric unfavorably. With an equity ratio now nonexistent due to negative equity, the company's asset financing is primarily through debt, posing potential risks.

Cash Flow

Very Positive

Cash flow analysis shows robust free cash flow growth of 99% year-over-year, indicating strong cash generation capabilities. The operating cash flow to net income ratio is a healthy 1.54, and the free cash flow to net income ratio stands at an impressive 1.53, both suggesting effective cash conversion from earnings.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
83.90M	84.48M	70.60M	63.19M	53.60M
	Gross Profit
73.43M	73.54M	60.60M	51.66M	43.04M
	EBIT
18.50M	15.57M	7.56M	-972.00K	-11.15M
	EBITDA
18.50M	17.46M	9.75M	507.00K	-8.95M
	Net Income Common Stockholders
13.56M	12.37M	6.63M	911.00K	-11.18M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
17.06M	15.71M	18.69M	43.81M	63.06M
	Total Assets
54.72M	55.38M	67.27M	100.08M	102.40M
	Total Debt
8.12M	9.25M	11.30M	12.29M	18.02M
	Net Debt
-8.95M	-6.47M	-7.39M	-31.52M	-45.04M
	Total Liabilities
50.37M	46.50M	58.42M	99.45M	95.90M
	Stockholders Equity
-462.00K	4.19M	4.26M	-3.98M	1.89M
Cash Flow		Free Cash Flow
20.92M	10.42M	-24.63M	-8.11M	46.56M
	Operating Cash Flow
21.10M	10.68M	-23.12M	-8.08M	46.82M
	Investing Cash Flow
-177.00K	-39.00K	-1.31M	104.00K	2.07M
	Financing Cash Flow
-18.97M	-14.15M	1.28M	-11.16M	-6.78M

Travelzoo Technical Analysis

Technical Analysis Sentiment

Negative

Last Price12.50

Price Trends

50DMA

14.98

Negative

100DMA

17.59

Negative

200DMA

15.18

Negative

Market Momentum

MACD

-0.76

Negative

RSI

42.49

Neutral

STOCH

73.07

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TZOO, the sentiment is Negative. The current price of 12.5 is below the 20-day moving average (MA) of 12.67, below the 50-day MA of 14.98, and below the 200-day MA of 15.18, indicating a bearish trend. The MACD of -0.76 indicates Negative momentum. The RSI at 42.49 is Neutral, neither overbought nor oversold. The STOCH value of 73.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TZOO.

Travelzoo Risk Analysis

Travelzoo disclosed 42 risk factors in its most recent earnings report. Travelzoo reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Travelzoo Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLX	68 Neutral	$635.88M	12.05	8.61%	8.25%	-3.22%	99.58%
TZOO	66 Neutral	$140.56M	11.88	494.69%	―	-0.68%	34.16%
Sector *	58 Neutral	$13.15B	6.73	-2.46%	3.87%	2.36%	-36.74%
QNST	57 Neutral	$896.72M	―	-5.52%	―	68.99%	84.85%
TSQ	50 Neutral	$108.64M	―	74.55%	11.40%	-0.72%	67.36%
CDLX	41 Neutral	$76.70M	―	-184.87%	―	-10.00%	-11.58%
MCHX	38 Underperform	$62.12M	―	-14.44%	―	-3.58%	50.73%

* Communication Services Sector Average

Performance Comparison

TZOO

Travelzoo

12.45

3.12

33.44%

DLX

Deluxe

14.76

-4.59

-23.72%

MCHX

Marchex

1.44

0.10

7.46%

QNST

Quinstreet

16.59

-0.66

-3.83%

TSQ

Townsquare Media

6.85

-4.72

-40.80%

CDLX

Cardlytics

1.54

-10.83

-87.55%

Travelzoo Earnings Call Summary

Earnings Call Date: Feb 25, 2025 | % Change Since: -26.38% | Next Earnings Date: Apr 23, 2025

Earnings Call Sentiment Neutral

The earnings call highlights Travelzoo's growth in operating income and strong cash position, driven by the success of JAX Flight Club and growing membership fee revenue. However, the decline in consolidated revenue and challenges in the Europe segment, particularly in Germany, present concerns. Despite these challenges, the company's strategic focus on membership growth and disciplined development of new initiatives like Travelzoo Meta support a cautiously optimistic outlook.

Highlights

Increased Operating Income

Q4 operating profit increased 8% year over year to $4.9 million or 24% of revenue, up from $4.5 million in the prior year.

Strong Cash Position

Consolidated cash, cash equivalents, and restricted cash grew to $17.7 million as of December 31, 2024, even after repurchasing shares.

Positive Growth in JAX Flight Club

JAX Flight Club expanded the team and increased marketing spend, growing revenue by 19% year over year.

Club Membership Revenue Growth

Revenue from membership fees is expected to contribute 5% incremental growth in Q1 2025, with further growth anticipated throughout the year.

High Engagement from Travel Enthusiasts

Travelzoo's affluent and active member base shows high engagement, with 91% open to new destinations and travel ideas.

Lowlights

Decline in Consolidated Revenue

Q4 revenue was $20.7 million, down 2% from the prior year, with Europe segment performance impacted by fluctuations in Germany.

Decreased EPS

The EPS was slightly lower compared to last year due to the strong dollar and negative other income impacting earnings.

Challenges in Europe Segment

Operating profit decreased in the Europe segment, with specific issues in Germany due to political turmoil and delayed advertising revenue.

Company Guidance

In the fourth quarter of 2024, Travelzoo reported consolidated revenue of $20.7 million, a 2% decrease year-over-year, with operating income rising by 8% to $4.9 million, accounting for 24% of revenue. Despite a decrease in outstanding shares, EPS was slightly lower due to the absence of last year's extraordinary income and unfavorable foreign exchange impacts. The North America and JAX Flight Club segments saw operating profit increases, while the Europe segment experienced a decline. Advertising revenue reached $19.1 million, while revenue per membership increased to $1.6 million, with expectations for substantial growth in 2025. The introduction of a membership fee is anticipated to contribute a 5% incremental growth in Q1 2025. The GAAP operating margin in North America improved to 33%, and the company repurchased 135,792 shares, closing the year with $17.7 million in cash and equivalents. Overall, Travelzoo is optimistic about higher revenue growth and profitability in 2025, driven by the recognition of recurring membership fee revenue.

Travelzoo Corporate Events

Financial Disclosures

Travelzoo Reports Q4 2024 Financial Results

Neutral

Feb 25, 2025

Travelzoo reported its financial results for Q4 2024, with a revenue of $20.7 million, a slight decrease of 2% year-over-year, but an 8% increase in consolidated operating profit to $4.9 million. The North American segment saw a 1% revenue increase, while the European segment experienced a 13% decline due to fluctuations in Germany. Jack’s Flight Club, in which Travelzoo holds a 60% stake, reported a 19% revenue increase. The company also highlighted its new membership fee structure, which is expected to drive future revenue growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.