Sabre (SABR) Stock Down 6% on Wider-Than-Expected Loss in Q3

Shares of Sabre Corporation SABR fell nearly 6% last Friday after the provider of software and technology solutions to travel industry reported a wider-than-expected loss for third-quarter 2020. The company’s adjusted loss per share of 82 cents came in much wider than the Zacks Consensus Estimate of loss of 63 cents. The bottom-line figure also compares unfavorably with the year-ago quarter’s earnings of 27 cents per share.

The company’s revenues plunged to $278 million from the $984 million reported in the third quarter of 2019. Moreover, the top-line figure missed the Zacks Consensus Estimate of $274 million. Revenues were primarily affected by significant reductions in air, hotel and other travel bookings due to the coronavirus pandemic’s adverse impact on the global travel industry.

Revenue Details

Travel Network revenues plunged 74% year over year to $237 million mainly due to unprecedented disruptions in travel due to the COVID-19 pandemic. The Distribution revenues slumped 84% to $104.6 million. During the quarter, the company’s total bookings plummeted 86% to 19.92 million, chiefly due to a sharp decline of 87% in net air bookings and a fall of 80% in lodging, ground, sea bookings.

Sabre Corporation Price, Consensus and EPS Surprise

Sabre Corporation Price, Consensus and EPS Surprise

Sabre Corporation price-consensus-eps-surprise-chart | Sabre Corporation Quote

IT Solutions revenues came in at $132.4 million, down 46% from the year-ago quarter, primarily on a 62% plunge in reservation revenues, and 28% in commercial and operations revenues. Numbers of boarded airline passengers, a key revenue metric for IT Solutions division, tanked 70% on a year-over-year basis.

Hospitality Solutions segment’s revenues plunged 40% year over year to $44.9 million on a 37% decline in central reservation system transactions.

The company reported adjusted gross profit of $192.8 million, slumping 68% from the year-ago quarter.

Adjusted operating loss was $196.7 million in the September-end quarter, as against the operating income of $133.1 million recorded in the year-earlier period.

Balance Sheet and Cash Flow

Sabre ended the third quarter with cash and cash equivalents of $1.67 billion compared with the previous quarter’s $1.31billion.

During the first nine months of 2020, the company used $587.1 million of cash for operational activities.

Zacks Rank & Stocks to Consider

Sabre currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Arrow Electronics ARW, Paylocity Holding Corporation PCTY and Covetrus, Inc. CVET, all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Arrow, Paylocity and Covetrus is currently pegged at 8.5%, 20%, and 31.6%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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