Why Sabre Earnings Might Not Be As Bad As First Thought

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Sabre Corp. (NASDAQ: SABR) saw itself as one of the biggest earnings losers on Tuesday after the company came out with its most recent report and hit a new 52-week low. However, a closer look at the earnings report would suggest that most of the results from this quarter are favorable. Investors may just be surprised initially by the mixed results and the unadjusted net income.

The company said that it had $0.27 in earnings per share (EPS) and $829.6 million in revenue, versus consensus estimates that called for $0.31 in EPS and $827.07 million in revenue. The same period from last year had $0.27 in EPS and $758.46 million in revenue.

Net income attributable to common stockholders totaled $24.6 million, compared to $129.4 million in the fourth quarter of 2015, a decrease of 81.0%. Although this comp is relatively high, it is primarily the result of a $106.2 million decrease in income from discontinued operations related to a one-time tax gain last year. Adjusted net income was more or less identical on a per share basis.

For the fourth quarter, the company reported its segments as:

  • Airline and Hospitality Solutions revenue increased 15.0% to $266.4 million, with operating income increasing 23.6% to $61.8 million.
  • Travel Network revenue increased 7.1% to $569.1 million, and operating income increased 10.7% to $194.0 million.

In terms of guidance for the 2017 full year, the company expects to have EPS in the range of $1.31 to $1.45 and revenues to be in the range of $3.54 billion to $3.62 billion. There are consensus estimates that are calling for $1.59 in EPS and $3.61 billion in revenue for the coming year.

Sean Menke, President and CEO of Sabre, commented:

In 2016, we delivered a year of strong growth across all of our businesses. Travel Network delivered key agency conversions and increased global share. Airline and Hospitality Solutions executed key implementations and surpassed the billion dollar revenue benchmark for the first time resulting in strong overall revenue, adjusted profit and cash flow growth.

On the books, cash and cash equivalents totaled $364.11 million at the end of the quarter, versus $321.13 million in the same period from last year.

Shares of Sabre were last trading down 12% at $21.81, with a consensus analyst price target of $30.73 and a 52-week trading range of $21.42 to $29.76.