One of the biggest stories of last week was how Travelzoo (NASDAQ:TZOO) shares plunged 29% in the week since its latest quarterly results, closing yesterday at US$7.13. It was a pretty negative result overall, with revenues of US$23m missing analyst predictions by 7.7%. Worse, the business reported a statutory loss of US$0.21 per share, a substantial decline on analyst expectations of a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the most recent consensus for Travelzoo from four analysts is for revenues of US$94.3m in 2026. If met, it would imply a reasonable 2.3% increase on its revenue over the past 12 months. The company is forecast to report a statutory loss of US$0.14 in 2026, a sharp decline from a profit over the last year. Before this earnings report, the analysts had been forecasting revenues of US$99.2m and earnings per share (EPS) of US$0.60 in 2026. The analysts have made an abrupt about-face on Travelzoo, administering a minor downgrade to to revenue forecasts and slashing the earnings outlook from a profit to loss.

The average price target fell 7.6% to US$19.63, implicitly signalling that lower earnings per share are a leading indicator for Travelzoo's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Travelzoo analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$9.50. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Travelzoo's revenue growth is expected to slow, with the forecast 4.7% annualised growth rate until the end of 2026 being well below the historical 8.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Travelzoo.

The Bottom Line

The biggest low-light for us was that the forecasts for Travelzoo dropped from profits to a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Travelzoo analysts - going out to 2028, and you can see them free on our platform here.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.