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What: Shares of Orbitz Worldwide were breaking out of orbit today, gaining 24% after reporting earnings this morning.
So what: The travel-deal merchant posted a per-share profit of $1.34; however, without a large tax benefit, the company had a loss of $0.11. Analysts had expected a loss of $0.06. Still, revenue was better than expected, climbing 7%, to 202.9 million, while analysts had expected sales of $198.1 million, or an increase of 4.4%. Sales in Orbitz's hotel division were strong, as room nights sold grew by 14%, and revenue from the category was up 27%. CEO Barney Harford noted that room-night growth has been even stronger in recent months, increasing 20% in March and April. Sales from airline tickets fell 4%, however.
Now what: Management also guided revenue for the quarter above estimates, saying it expects $214 to $220 million, while the analyst consensus is at $212.6 million. The January-March quarter is generally Orbitz's slowest, but the steeper loss than expected is concerning, nonetheless. Improved revenue growth is nice, of course, but Orbtiz operates in a fiercely competitive industry, up against the likes of Expedia, priceline.com, and Kayak, among others. Despite the slim profits, the stock is not cheap, and top-line improvements aren't trickling down to the bottom. I'd stay away from this one.
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The article Why Orbitz Shares Shot Up originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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