Looking into the current session, Travelzoo TZOO shares are trading at $8.03, after a 12.31% spike. Moreover, over the past month, the stock spiked by 75.35%, but in the past year, decreased by 52.47%. Shareholders might be interested in knowing whether the stock is undervalued, even if the company is performing up to par in the current session.

The stock is currently higher from its 52-week low by 164.14%. Assuming that all other factors are held constant, this could present itself as an opportunity for investors trying to diversify their portfolio with Travel Services stocks, and capitalize on the lower share price observed over the year.

The P/E ratio is used by long-term shareholders to assess the company’s market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E indicates that shareholders do not expect the stock to perform better in the future, and that the company is probably undervalued. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

Most often, an industry will prevail in a particular phase of a business cycle, than other industries.

Compared to the aggregate P/E ratio of 12.01 in the Travel Services industry, Travelzoo Inc. has a higher P/E ratio of 20.43. Shareholders might be inclined to think that Travelzoo Inc. might perform better than its industry group. It’s also possible that the stock is overvalued.

There are many limitations to price to earnings ratio. It is sometimes difficult to determine the nature of the earnings makeup of a company. Shareholders might not get what they're looking for, from trailing earnings.