Core Insights - Pagaya Technologies Ltd. (PGY) focuses on AI and machine learning for credit underwriting, while LendingTree, Inc. (TREE) operates a traditional online lending marketplace [1][2] - PGY has shown significant growth with a 344.6% increase in stock price year-to-date, compared to TREE's 88.8% [11][14] Pagaya Technologies Ltd. (PGY) - PGY has diversified its business model from personal loans to include auto lending and point-of-sale financing, enhancing resilience across economic cycles [3] - The company has established a network of over 135 institutional partners and utilizes forward flow agreements for funding stability [4] - In Q2 2025, PGY recorded its second consecutive quarter of positive GAAP net income and raised its revenue guidance for 2025 to between $1.25 billion and $1.325 billion [5] - PGY's proprietary technology allows lenders to present pre-approved offers, improving credit access with minimal marketing costs [6] - The company operates with minimal on-balance-sheet exposure, maintaining liquidity and minimizing loan write-downs through strategic ABS issuance and forward flow agreements [7] - The Zacks Consensus Estimate for PGY's revenues in 2025 and 2026 is $1.31 billion and $1.53 billion, indicating year-over-year growth rates of 28.4% and 16.3% respectively [19] - PGY's earnings estimates for 2025 and 2026 suggest year-over-year growth of 219.3% and 29.3% respectively [21] LendingTree, Inc. (TREE) - TREE connects consumers with financial service providers and has expanded its offerings to include credit cards and various loan types [8][9] - The company launched its first consumer credit product, WinCard, in 2023, and has initiatives to enhance cross-selling opportunities [9][10] - In Q2 2025, TREE's adjusted EBITDA rose 35% year-over-year, with total revenues expected between $1 billion and $1.05 billion for 2025 [13] - The Zacks Consensus Estimate for TREE's revenues in 2025 and 2026 is $1.03 billion and $1.10 billion, implying year-over-year growth rates of 14.9% and 6.8% respectively [22] - TREE's earnings estimates indicate a 37% year-over-year growth for 2025 and 7.5% for 2026 [23] Comparative Analysis - PGY's stock is trading at a lower price-to-book (P/B) ratio of 6.72X compared to TREE's 8.44X, indicating a more attractive valuation [15] - PGY has a return on equity (ROE) of 31.69%, while TREE's ROE is higher at 52.33%, reflecting TREE's efficiency in using shareholder funds [17] - Despite TREE's operational maturity and stability, PGY has a stronger revenue and earnings growth outlook, along with a better valuation [26]

Company Overview - LendingTree operates an online marketplace that connects consumers with lenders and insurers for mortgages, personal loans, credit cards, insurance, and other financial products [1] - The company was founded in 1996 by Douglas Lebda, who is still serving as CEO [1] Leadership and Expertise - Douglas Lebda holds a PhD in Law and Economics, with a dissertation focused on corporate wrongdoing [1] - The company has a longstanding interest in the stock market, particularly in US small to mid-cap stocks, both long and short [1] Analytical Approach - The analysis aims to provide insights that go beyond previous writings on the company, utilizing academic research and modeling secular trends [1] - The focus includes correlating financial statement numbers and key performance indicators (KPIs) with external variables to uncover interesting perspectives on the company [1]

Core Points - The Homebuyer Privacy Protection Act, also known as the Trigger Leads Bill, was signed into law, enhancing consumer privacy for mortgage applicants by preventing unsolicited offers and communications [1][6][8] - The legislation received bipartisan support, passing unanimously in both chambers of Congress before being signed by the President [2][6] - The law amends the Fair Credit Reporting Act, prohibiting consumer reporting agencies from selling or distributing trigger leads without explicit consumer permission or a pre-existing relationship [3][4] Industry Impact - Trigger leads, which are prescreened consumer reports generated when applying for a mortgage, have been a growing concern in the homebuying industry due to the unsolicited communications they generate [4][5] - A survey indicated that 56% of loan applicants received between 10-50 unsolicited communications, with 83% expressing discomfort with these practices [4][5] - The legislation aims to restore privacy for homebuyers and reduce the pressure and confusion associated with unsolicited communications during the mortgage process [5][6][8] Company Response - LendingTree, a major player in the online financial platform space, has expressed strong support for the legislation, highlighting its role in protecting consumers and promoting a more transparent homebuying experience [7][8][10] - The company emphasizes that the new law will empower consumers to make informed financial decisions without harassment from lenders not associated with their mortgage search [8][9] - The Homebuyer Privacy Protection Act is set to be implemented within 180 days and will take effect in March 2026 [9]

Core Insights - LendingTree, Inc. (TREE) shares reached a 52-week high of $73.26, closing at $71.81, with a 70.1% increase over the past year, outperforming the industry growth of 30.8% [1][8] - The company's revenue growth is significantly driven by its insurance segment, which has a four-year CAGR of 13.4% and is expected to continue growing into the first half of 2025 [5][8] - LendingTree is diversifying its offerings beyond mortgage products, expanding into credit cards, auto loans, personal loans, student loans, and small business financing [7][8] Revenue Growth - The insurance segment has been a major contributor to LendingTree's strong performance, with consistent revenue growth [5] - The company plans to expand its product offerings through its online marketplace, enhancing long-term profitability prospects [6] Diversification Strategy - LendingTree has strategically reduced its dependence on mortgage-related products by growing its Consumer segment [7] - The launch of the LendingTree WinCard in February 2023 is a key initiative to boost its non-mortgage portfolio [8] Expense Management - The company has demonstrated strong cost-control discipline, with a negative CAGR of 1.2% in its cost base from 2020 to 2024 [9] - Despite a year-over-year increase in expenses in the first half of 2025, management's focus on cost-containment is expected to support bottom-line growth [11] Return on Equity - LendingTree reported a robust ROE of 25.79%, significantly higher than the industry average of 2.07%, indicating efficient utilization of shareholders' funds [12][14] Financial Concerns - As of June 30, 2025, the company reported cash and equivalents of $149.1 million against long-term debt of $385.1 million, raising concerns about its liquidity profile [16] - The company's capital distribution strategy faces challenges due to limited cash and high debt levels, with no shares repurchased in the first quarter of 2025 [18] Valuation Metrics - LendingTree's trailing price to book (P/B) ratio is 8.28X, above the industry's 6.88X, indicating that its shares are trading at a premium [19][21] - The projected earnings for 2025 and 2026 imply year-over-year rises of 36.99% and 7.49%, respectively [22] Investment Outlook - Despite financial constraints, LendingTree's strong revenue growth and market positioning make it an attractive investment option, currently holding a Zacks Rank 1 (Strong Buy) [26]

Core Viewpoint - LendingTree, Inc. has successfully closed a $475 million credit facility, which includes a $400 million five-year Term Loan B and a $75 million revolving credit facility, enhancing its financial structure and operational flexibility [1][2][3] Financing Details - The new financing replaces the existing Term Loan B due 2028 and the loan agreement with Apollo, providing significant benefits to the company's capital structure [1][2] - The facility is led by Bank of America and Truist Securities, offering a simplified and cost-efficient debt profile [2] - Key terms include interest rates of SOFR + 450 basis points for the term loan and SOFR + 350 basis points for the revolver, with a potential 25-basis point reduction upon achieving a B2 rating from Moody's [6] Strategic Implications - The refinancing is viewed as a strategic move to strengthen the balance sheet, allowing the company to pursue growth opportunities and enhance long-term shareholder value [3] - The new facility reduces restrictive covenants, including the removal of minimum cash and AEBITDA requirements, and restores the ability to repurchase shares and make strategic investments [6] - The proceeds will be used for refinancing existing debt and general corporate purposes, enhancing liquidity and operational flexibility [6]

Core Viewpoint - Tree.com (TREE) has experienced significant stock price appreciation, with a 67.5% increase over the past month and a 63.9% gain since the beginning of the year, outperforming both the Zacks Finance sector and the Zacks Financial - Mortgage & Related Services industry [1][2]. Financial Performance - Tree.com has consistently exceeded earnings expectations, reporting an EPS of $1.13 against a consensus estimate of $0.97 in its last earnings report on July 31, 2025 [2]. - For the current fiscal year, Tree.com is projected to achieve earnings of $4.37 per share on revenues of $1.03 billion, reflecting a 36.99% increase in EPS and a 14.93% increase in revenues [3]. - The following fiscal year is expected to see earnings of $4.7 per share on revenues of $1.1 billion, indicating year-over-year changes of 7.49% and 6.75%, respectively [3]. Valuation Metrics - Tree.com currently trades at 14.5 times the current fiscal year EPS estimates, which is below the peer industry average of 15.3 times [7]. - On a trailing cash flow basis, the stock trades at 19.7 times, compared to the peer group's average of 7.2 times, suggesting it is not positioned among the top value stocks [7]. Zacks Rank and Style Scores - Tree.com holds a Zacks Rank of 1 (Strong Buy), supported by favorable earnings estimate revisions from analysts [8]. - The stock has a Value Score of C, a Growth Score of B, and a Momentum Score of C, resulting in a combined VGM Score of B [6][9]. - Given the Zacks Rank and Style Scores, Tree.com appears to have potential for further price appreciation in the near term [9].

Core Viewpoint - Tree.com (TREE) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts' increasing earnings estimates [1][2]. Earnings Estimates - Analysts are optimistic about Tree.com's earnings prospects, leading to higher estimates that are expected to positively impact the stock price [2]. - The current-quarter earnings estimate is $1.23 per share, reflecting a 53.8% increase from the previous year, with a 36.76% rise in consensus estimates over the last 30 days [5]. - For the full year, the earnings estimate is projected at $4.37 per share, indicating a 37.0% increase from the prior year, supported by three upward revisions against one downward revision [6]. Zacks Rank - Tree.com holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts on upward earnings estimate revisions, which historically correlate with stock performance [3][7]. - Stocks with a Zacks Rank 1 and 2 have shown significant outperformance compared to the S&P 500 [7]. Stock Performance - The stock has appreciated by 33% over the past four weeks due to favorable estimate revisions, suggesting potential for further upside [8].

Core Viewpoint - Tree.com (TREE) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3][5]. - Institutional investors often adjust their valuations based on earnings estimates, leading to significant stock price movements when they buy or sell large amounts of shares [3]. Company Performance and Outlook - The upgrade for Tree.com reflects an improvement in the company's underlying business, suggesting that investors may push the stock price higher [4]. - Tree.com is expected to earn $4.37 per share for the fiscal year ending December 2025, with no year-over-year change, but the Zacks Consensus Estimate has increased by 28.6% over the past three months [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [8][9].

Core Insights - U.S. stocks have experienced volatility due to tariff news and disappointing job growth, leading to a significant drop in the S&P 500 [1] - Despite the pullback, investor sentiment remains positive, with ongoing negotiations and expectations of lower interest rates supporting a potential recovery [2] Stock Recommendations - Recommended stocks based on relative price strength include Barrick Mining Corporation, LendingTree, Mercury General Corporation, Rigel Pharmaceuticals, and Levi Strauss & Co. [3] Relative Price Strength Strategy - The potential for considerable returns in stocks is primarily determined by earnings and valuation ratios, alongside their price performance relative to peers [4] - Stocks outperforming their industries or benchmarks should be included in investment portfolios for higher return potential [5] - Stocks that have outperformed the S&P 500 over 1 to 3 months and show solid fundamentals are ideal candidates for investment [6] Analyst Optimism - Positive estimate revisions for upcoming earnings are crucial, as upward revisions typically lead to price gains [7] Screening Parameters - Stocks must show positive relative price changes over 12 weeks, 4 weeks, and 1 week, alongside positive current-quarter estimate revisions [8] - Stocks like Barrick Mining, LendingTree, and Rigel Pharmaceuticals have outperformed the S&P 500 and show strong earnings revisions [8] Company Highlights - **Barrick Mining Corporation**: Expected EPS growth rate of 33.5%, with a 55.6% year-over-year growth estimate for 2025 [10][11] - **LendingTree**: 45.1% growth estimate for 2025, with a trailing four-quarter earnings surprise of approximately 70.8% [11][12] - **Mercury General Corporation**: 1,000% surge in earnings estimate over the past 60 days, with a trailing earnings surprise of about 166% [13][14] - **Rigel Pharmaceuticals**: 170.7% growth estimate for 2025, with an average earnings surprise of 1,840.5% [15][16] - **Levi Strauss & Co.**: 4% year-over-year growth estimate for fiscal 2025, with a 5.7% increase in earnings estimate over the past 60 days [17]

Core Insights - LendingTree reported a significant earnings beat for Q2 2025, with non-GAAP EPS of $1.13, surpassing the consensus estimate of $0.38 by $0.75, and GAAP revenue of $250.1 million, slightly above the expected $246.97 million [1][2] Financial Performance - Adjusted EPS (Non-GAAP) increased by 109% year-over-year to $1.13 from $0.54 in Q2 2024 [2] - GAAP revenue rose 19% year-over-year to $250.1 million from $210.1 million in Q2 2024 [2] - Adjusted EBITDA (Non-GAAP) grew by 35.3% to $31.8 million compared to $23.5 million in Q2 2024 [2] - Variable Marketing Margin (Non-GAAP) increased by 18% year-over-year to $83.6 million [2] - Net Income (GAAP) rose 14.1% to $8.9 million from $7.8 million in Q2 2024 [2] Business Model and Strategy - LendingTree operates an online marketplace connecting consumers with over 400 partners, including lenders and insurance carriers, generating revenue through fees for completed requests [3] - The company has focused on diversifying product offerings and strengthening partner relationships, particularly in insurance and consumer loans [4] - Investments in AI and automation are central to improving user experience and operational efficiency [4] Segment Performance - The Insurance segment's revenue grew 21% to $147.2 million, with profit increasing 10% to $40.0 million, although profit margin decreased to 27% from 30% due to competitive pressures [6] - The Consumer segment saw a 12% revenue increase to $62.5 million, with profit jumping 19% to $32.1 million and profit margin expanding to 51% [7] - The Home segment's revenue climbed 25% to $40.4 million, with profit soaring 41% to $13.1 million, driven by a 38% increase in home equity loan revenue [8][9] Future Guidance - For Q3 2025, revenue guidance is set at $273–$281 million, with variable marketing margin expected to reach $86–$89 million and adjusted EBITDA forecasted between $34–$36 million [12] - For FY2025, management projects revenue of $1.00–$1.05 billion, with improved profitability metrics anticipated [12] - The company expects continued growth in the insurance segment and plans to invest in partner diversification and technology [12]