Expedia is scheduled to report quarterly earnings after the market close on Thursday. Investors will be keyed in to Expedia's international growth in Asia along with any benefits from a recently announced partnership with Groupon.
Analysts expect Expedia to report a second-quarter profit of 49 cents a share, compared with a profit of 40 cents in the year-ago quarter. Revenue is estimated to increase to $962-million (U.S.) from $834-million a year ago, according to a poll of analysts by Thomson Reuters. Analysts are expecting continued improvements at Expedia's Hotels.com subsidiary along with further momentum at the company's travel reviews site TripAdvisor.
The following is taken from a first-quarter report published by TheStreet Ratings, an independent-research unit of TheStreet that uses a quantitative model to evaluate stocks.
Expedia's earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Expedia increased its bottom line by earning $1.47 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($1.87 versus $1.47).
We rate Expedia a buy. This is driven by some important positives, which we believe should have a greater effect than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Our model has a price target of $35 on shares of Expedia, offering the potential for 16 per cent upside from current levels.
The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
The gross profit margin for Expedia is currently very high, coming in at 82.40 per cent. It has increased from the same quarter the previous year. Along with this, the net profit margin of 6.30 per cent is above that of the industry average.
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