Bear of the Day: Travelzoo (TZOO)

Travelzoo TZOO was negatively impacted by international conflicts, such as the Iran War, in the second quarter. Analysts cut their full year earnings estimates on this Zacks Rank #5 (Strong Sell).

Travelzoo is a club for travel enthusiasts. It reaches 30 million travelers. Club Members receive Club Offers negotiated and vetted by the company’s deal experts around the globe. It has relationships with thousands of top travel companies which gives them access to irresistible deals.

Travelzoo Missed Big on Earnings in the Second Quarter of 2026

On July 28, 2026, Travelzoo reported its second quarter 2026 results and missed on the Zacks Consensus by $0.36. Earnings were a loss of $0.21 versus the Zacks Consensus of $0.15.

Revenue was down 3% to $23.2 million. Its revenue consists of advertising revenues and commissions derived from and generated in connection with purchases made by Travelzoo members, as well as membership fees.

Travelzoo said international conflicts created uncertainty among advertisers and travelers. All of Travelzoo’s business segments were negatively impacted.

Travelzoo also spent more on marketing in the second quarter in order to grow the membership business. The marketing spend averaged $2.3 million per quarter from Q1 2025 to Q1 2026. But in the second quarter of 2026, the company spent $4.7 million.

It costs $50 to get an annual membership as a Club Member. But this revenue isn’t captured immediately. Membership fee revenue is recognized ratably over the full one-year subscription period.

But the cost outlay happens immediately.

Travelzoo’s membership revenue was $7.7 million in 2025, or 8% of the total revenue. The company estimates it will be $17.2 million in 2026, or 13% of the total revenue. It also estimates by 2027 it will be $30 million, or 30% of total revenue.

Analysts Cut Travelzoo’s Earnings Estimates for 2026 and 2027

The costs are going to outweigh the gains for a while. Three estimates were lowered for 2026 over the last 60 days. That pushed the Zacks Consensus down to a loss of $0.14 from $0.58.

That’s a decline of 134% as the company made $0.41 last year.

Three estimates were also cut for 2027 in the last 60 days as well. But analysts expect the company to rebound back to positive earnings. The Zacks Consensus is now looking for $0.73 in 2027, down from the prior consensus of $0.96.

That’s earnings growth of 616%.

Here’s what it all looks like on the five-year price, consensus, and surprise chart.

Image Source: Zacks Investment Research

Shares of Travelzoo Fall to a Multi-Year Low

It’s been a tough few months for Travelzoo shares as it unveiled its strategy to grow the membership fee business.

They’ve fallen back to early 2026 lows, which were multi-year lows.

Image Source: Zacks Investment Research

But Travelzoo is cheap. It has a price-to-sales (P/S) ratio of just 0.6. A P/S ratio under 1.0 usually indicates a company is undervalued. An investor is buying $1.00 worth of sales for just $0.60. The sales are on sale.

Travelzoo also has been repurchasing shares. It repurchased $1.9 million worth of shares in the second quarter.

It finished the second quarter of 2026 with a cash balance of $7.6 million.

Investors interested in Travelzoo might want to wait to see if their strategy is going to work, and for the earnings to turn around, before getting in.

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This article originally published on Zacks Investment Research (zacks.com).

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