Here's Why You Should Buy LendingTree (TREE) Stock Now
LendingTree Inc.’s TREE reduced dependence on mortgage-related revenue sources is likely to support its financials. Also, its inorganic growth moves have strengthened its online lending platform.
Analysts are also bullish on the stock’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved 9.6% north. TREE currently carries a Zacks Rank #2 (Buy).
Over the past six months, TREE shares have rallied 185%, outperforming the industry’s growth of 23.1%.
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Here are a few factors that make TREE an attractive investment option now.
Revenue Diversification Efforts Aid: LendingTree is focused on diversifying its non-mortgage product offerings, particularly in the Consumer segment. Over the past years, the company has increased its services, such as credit cards, and widened loan offerings to personal, auto, small business and student loans.
The Consumer segment’s revenues witnessed a compound annual growth rate (CAGR) of 3.3% over the last three years (ended 2023). LendingTree’s initiatives, including SPRING (previously MyLendingTree) and TreeQual, are likely to improve cross-selling opportunities with existing customers, thus driving profitability.
Home Segment Sees Revenue Growth: LendingTree’s Home segment’s revenues (consisting of Home Equity revenues and mortgage revenues) saw a CAGR of 1.4% over the last three years (ending 2022). The trend reversed in 2023 due to muted purchase markets and lower demand from higher rates. Nonetheless, LendingTree is focusing on improving purchase conversion rates, while assisting in meeting its customer demand for home equity loans.
Also, LendingTree’s market-leading position and flexible business model, which provides more diversified solutions for a wider array of lenders, will enable it to navigate through fluctuating macroeconomic situations and high interest-rate environments.
Buyouts to Aid Bottom Line: LendingTree’s bottom line has benefited from its acquisition spree. Since 2016, the company has completed a number of deals for more than $1 billion, including potential earnouts. Over the past few years, the company has enhanced its credit services and credit card product offerings while strengthening its online lending platform through acquisitions.
In first-quarter 2022, it acquired an equity interest in EarnUp, a consumer-facing payments platform, for $15 million. Therefore, strategic initiatives will likely further support bottom-line growth.
Earnings Growth Projections Encouraging: For 2024, the Zacks Consensus Estimate for the company’s earnings is pinned at $2.50, indicating 9.6% year-over-year growth. This is likely to continue in 2025. Notably, the estimate for 2025 earnings of $3.22 indicates 28.9% year-over-year growth.
Other Stocks to Consider
A couple of other stocks from the investment management space are PennyMac Financial Services PFSI and Velocity Financial VEL. Both stocks sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PennyMac Financial’s current-year earnings has been revised marginally upward over the past seven days. PFSI shares have risen 30.5% in the past three months.
Velocity Financial’s 2024 earnings estimates have been revised 1.4% north over the past 60 days. Over the past three months, VEL shares have gained 9.8%.
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LendingTree, Inc. (TREE) : Free Stock Analysis Report
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