Orbitz Worldwide (OWW) Hits a Six-Year High
Shares of online travel booking site Orbitz Worldwide (OWW) surged to a six-year high last week, after the company reported strong second quarter earnings that topped analyst estimates. The company reported net income of $561,000, breakeven on a per share basis -- down from the $4.6 million, or $0.04 per share, it reported in the prior year quarter. However, the company's quarterly earnings included an $18.1 million write-off of deferred financing fees and other refinancing costs.
Revenue rose 12% to $225.8 million, topping analyst estimates of $219 million. Gross margin decreased slightly from 17.6% to 17.4%, as input costs rose 11%. Daily Chart
The company attributed that strong top line growth to higher hotel and vacation package sales. Orbitz's gross bookings rose 4% from the prior year quarter, thanks to higher airfares and more expensive hotel and vacation package bookings. In addition, the average stay at hotels increased 20% during the quarter. Orbitz owns its namesake website, along with CheapTickets and European company Ebookers. Orbitz also raised its full year sales guidance, and now expects revenue between $840 million to $850 million, up from a range between $810 million to $830 million. Adjusted EBITDA is now expected to rise 8% to 10%, up from a prior forecast between 5% and 10%. For the current quarter, Orbitz forecasts revenue between $214 million to $220 million, higher than the average consensus estimate of $214 million. Orbitz fared much better than its rival Expedia (EXPE
), which plunged 25% on July 26 after its second quarter earnings completely missed analyst estimates. For its second quarter, Expedia's adjusted earnings came in at $0.64 per share, down from the $0.89 per share it earned in the prior year quarter. Analysts had expected the company to earn $0.79 per share. Revenue edged up from $1.04 billion to $1.21 billion, but missed the consensus estimate of $1.26 billion. Expedia's top and bottom line growth were taken down by a monstrous 33% year-on-year increase in sales and marketing costs, driven by a $128 million rise in direct costs. Mark Walton, the company's VP of strategy and account management, stated, "We see a continuing trend of travelers adhering to travel management policies and initiatives that save their companies money." He also highlighted the company's growth in mobile. "From booking to itinerary management to check in - and everything in between - we are encouraged to see travelers are demonstrating an increased reliance on our mobile solution at all stages of business travel." Although shares of Orbitz initially surged after earnings on Thursday, the stock sold off on Friday with the broader market. However, the stock remains up more than 250% over the past twelve months. Due to this quick ascent, some of the company's fundamental ratios are getting overheated. The stock is now trading at 33 times forward earnings with a whopping price-to-book ratio of 93.5, which suggests that the company needs to keep beating estimates to justify its lofty valuation. Other News About OWW Why Orbitz Shares Skyrocketed
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Published on Aug 13, 2013
By Leo Sun