As part of a new series here at The Acquirer’s Multiple, we’re providing a new feature called ‘Stock in Focus‘ where we focus on one of the stocks from our Stock Screeners.
One of the cheapest stocks in our Stock Screeners is Travelzoo (NASDAQ: TZOO).
Travelzoo acts as a publisher of travel and entertainment offers. The company informs a varied number of members in Asia Pacific, Europe, and North America, as well as millions of website users, about the best travel, entertainment and local deals available from various companies. It provides travel, entertainment, and local businesses in a flexible manner to the various customers. The company operates in three geographic segments namely Asia Pacific, Europe, and North America. Travelzoo derives its revenue through advertising fees including listing fees paid by travel, entertainment, and local businesses to advertise their offers on the company’s media properties. Most of the company’s revenue is derived from North America.
A quick look at Travelzoo’s share price history (below) over the past twelve months shows that the price is down 72%, but here’s why the company is undervalued.
Summary
Market Cap: $41 Million
Enterprise Value: $35 Million
Operating Earnings*
Operating Earnings: $9 Million
Acquirer’s Multiple
Acquirer’s Multiple: 3.69
Free Cash Flow (TTM)
Free Cash Flow: $11 Million
FCF/EV Yield:
FCF/EV Yield: 31%
Other Indicators
Piotroski F-Score: 6
Altman Z-Score: 3.52
Beneish M-Score: -2.93
*We make adjustments to operating earnings by constructing an operating earnings figure from the top of the income statement down, where EBIT and EBITDA are constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–income that a company does not expect to recur in future years–ensures that these earnings are related only to operations.
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