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Travelzoo Inc. Stock Upgraded (TZOO)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Travelzoo (Nasdaq: TZOO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • TZOO's revenue growth trails the industry average of 32.9%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • TZOO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, TZOO has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, TRAVELZOO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 83.82% to $13.01 million when compared to the same quarter last year. In addition, TRAVELZOO INC has also vastly surpassed the industry average cash flow growth rate of 16.16%.
  • TRAVELZOO INC's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRAVELZOO INC increased its bottom line by earning $1.14 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($1.17 versus $1.14).
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Travelzoo Inc., an Internet media company, together with its subsidiaries, publishes travel and entertainment deals from travel and entertainment companies, and local businesses in North America and Europe. The company has a P/E ratio of 15.8, below the S&P 500 P/E ratio of 17.7. Travelzoo has a market cap of $332.6 million and is part of the technology sector and internet industry. Shares are up 10.8% year to date as of the close of trading on Wednesday.

You can view the full Travelzoo Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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