Head to Head Contrast: Travelzoo (NASDAQ:TZOO) vs. TrueCar (NASDAQ:TRUE)
by Michael Walen · The Markets DailyTrueCar (NASDAQ:TRUE – Get Free Report) and Travelzoo (NASDAQ:TZOO – Get Free Report) are both small-cap communication services companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.
Earnings and Valuation
This table compares TrueCar and Travelzoo”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| TrueCar | $181.22 million | 1.25 | -$31.05 million | ($0.22) | -11.55 |
| Travelzoo | $91.72 million | 0.57 | $4.70 million | $0.03 | 171.67 |
Travelzoo has lower revenue, but higher earnings than TrueCar. TrueCar is trading at a lower price-to-earnings ratio than Travelzoo, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
79.4% of TrueCar shares are owned by institutional investors. Comparatively, 27.4% of Travelzoo shares are owned by institutional investors. 3.9% of TrueCar shares are owned by insiders. Comparatively, 45.3% of Travelzoo shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for TrueCar and Travelzoo, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| TrueCar | 1 | 1 | 0 | 0 | 1.50 |
| Travelzoo | 2 | 0 | 2 | 0 | 2.00 |
Travelzoo has a consensus price target of $13.83, suggesting a potential upside of 168.61%. Given Travelzoo’s stronger consensus rating and higher possible upside, analysts plainly believe Travelzoo is more favorable than TrueCar.
Profitability
This table compares TrueCar and Travelzoo’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| TrueCar | -10.27% | -23.76% | -18.02% |
| Travelzoo | 0.51% | -9.35% | 1.00% |
Risk & Volatility
TrueCar has a beta of 2.22, meaning that its stock price is 122% more volatile than the S&P 500. Comparatively, Travelzoo has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500.
Summary
Travelzoo beats TrueCar on 10 of the 14 factors compared between the two stocks.
About TrueCar
TrueCar, Inc. operates as an internet-based information, technology, and communication services company in the United States. It operates its platform on the TrueCar website and mobile applications. Its platform enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar certified dealers. The company also offers forecast and consulting services regarding determination of the residual value of an automobile at given future points in time, which are used to underwrite automotive loans and leases, and by financial institutions to measure exposure and risk across loan, lease, and fleet portfolios. In addition, it provides TrueCar Trade, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership; and DealerScience that provides dealers with advanced digital retailing software tools. The company was formerly known as Zag.com Inc. The company was incorporated in 2005 and is headquartered in Santa Monica, California.
About Travelzoo
Travelzoo, together with its subsidiaries, operates as an Internet media company that provides travel, entertainment, and local experiences worldwide. It operates in four segments: Travelzoo North America, Travelzoo Europe, Jack's Flight Club, and New Initiatives. The company offers Travelzoo website, Travelzoo Top 20 email newsletters, Standalone email newsletters, Travelzoo Network, Travelzoo mobile applications, Jack's Flight Club website, Jack's Flight Club mobile applications, and Jack's Flight Club newsletters. The company's Travelzoo website and newsletters include local deals and getaways listings that allow members to purchase vouchers for offers from local businesses, such as spas, hotels, and restaurants; Jack's Flight Club, a subscription service that provides members with information about exceptional airfares; and Travelzoo Network, a network of third-party websites that list travel deals published by the company. It serves airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Travelzoo Inc. was incorporated in 1998 and is headquartered in New York, New York.