Why Orbitz (OWW) was Crushed Today

NEW YORK (TheStreet) -- Orbitz Worldwide  (OWW) was crushed 19.7% to $7.69 in Tuesday trading after reporting disappointing third-quarter earnings before the bell.

Earnings of 11 cents a share were 2 cents lower than analysts surveyed by Thomson Reuters expected. Revenue of $220.9 million was 11% higher than a year earlier.

Also depressing prices, the online travel agent revised its full-year revenue guidance down to $840 million from its earlier forecast between $840 and $850 million. Analysts had hoped for around $849.4 million in revenue over the year.

"Air volumes are lower in the U.S. and in Europe as we focus marketing investments on hotel," said CFO Mike Randolfi during a conference call. "This is reflected in our slightly lowered revenue guidance," The former has a large bearing on the company as domestic sales account for 72% of total revenue.

Orbitz's losses are in stark contrast to the 36.7% gains achieved after reporting a 12% year-over-year second-quarter revenue hike.

Rival Expedia (EXPE) reported third-quarter earnings after market close last Wednesday which propelled shares 18% higher during the following day's trading. Third-quarter earnings of $1.43 a share beat the $1.35 a share forecast by analysts surveyed by Yahoo! Finance. Revenue of $1.4 billion surpassed expectations by $30 million and grew 17% year over year.

Expedia and Travelzoo (TZOO) were off 1.1% and 1.5%, respectively, during Tuesday's trading.

TheStreet Ratings team rates Orbitz Worldwide Inc as a Sell with a ratings score of D. The team has this to say about its recommendation:

"We rate Orbitz Worldwide INC (OWW) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share."

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