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Why LendingTree Stock Is Surging Higher Today

By Todd Campbell Fool.com

What happened

Shares ofLendingTree Inc. (NASDAQ: TREE) are soaring 15.2% higher as of 12:30 p.m. EDT, after the company reported top-line financial results that were ahead of industry watchers' outlook and boosted its full-year guidance.

So what

LendingTree's prowess at matching up borrowers with lenders helped it deliver remarkable first-quarter year-over-year sales growth of 40%.

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Thanks to growing demand for non-mortgage products, first-quarter revenue clocked in at $132.5 million. Revenue from mortgage products grew 14% to 62.9 million, and revenue from non-mortgage products jumped 75% to $69.6 million. Non-mortgage products accounted for 53% of sales in the quarter, up from 42% a year ago.

Leveraging revenue growth against fixed costs resulted in adjusted net income of $11.5 million, up 34% from a year ago. Earnings per share grew to $0.85 in the quarter, up 27%.

Now what

Momentum in the first quarter is expected to continue, according to management. LendingTree upped its revenue guidance to between $535 million and $545 million from $500 million to $520 million. If it hits that target, it will represent year-over-year growth of between 39% and 42%.

The company also increased its adjusted earnings before interest, taxes, depreciation, and amortization to at least $95 million from prior estimates for at least $93 million.

Given that LendingTree is the market share leader, and it's expanded beyond mortgages in a way that can allow it to more deeply intertwine itself with lenders and consumers, the potential for further growth could be big. The company estimates its share in its core market at 21%, and it estimates it has penetrated just 3.5% of the $12.1 billion market for financial services online advertising. As millennials continue to drive online banking trends, it's not unreasonable to think that LendingTree is positioned to benefit, as long as the economy and wages grow.

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Todd Campbell has no position in any stocks mentioned.His clients may have positions in the companies mentioned.The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.