TREE - LendingTree: Not Reaching For The Stars Anytime Soon
- A transactional platform business with limited benefit from durable client relationships; requiring continued stream of marketing and sales dollars without material scale effect.
- Overvalued at forward 2021E ~37.8x EV/EBITDA and ~1.1% FCF yield on our forecast.
- No near-term capital return as catalyst to be expected due to restrictive debt covenant on senior secured revolving credit facility.
- Headwind for growth rebound is the higher interest rates environment that lower the refinancing volumes and high margin in the home segment.
- Cash flow generation and potential M&A wildcard considering recent comparable transaction provide some unconvincing optionality.
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LendingTree: Not Reaching For The Stars Anytime Soon