Will Expedia Shares Rise After Fiscal Second Quarter Results?

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Expedia (NASDAQ: EXPE), a travel agency offering everything from airfare, hotel rooms, car rentals to cruises, is expected to report its fiscal second quarter results on Thursday, August 4. to revenues and profits exceeding consensus estimates. From the company shares have traded down 43% this year due to anxiety over a potential recession, staffing issues with airlines and higher interest rates. Wider concern about the health of the global economy and the renewal of Covid restrictions in parts of China have raised fears that travel demand will decline in the coming quarters after rebounding this summer. We believe pent-up travel demand after nearly two years of deeply depressed travel volume will set the stage for 2022. Hotels were down 11% in January, but up 8% in February, 7% in March and 10% in April. In light of these trends, Expedia could see favorable booking growth in the second quarter. The company’s second-quarter report is likely to include monthly sales data through July, giving investors a good picture of demand trends heading into the second half of 2022 as well.

Our forecast indicates that Expedia’s valuation is $144 per share, or 40% above the current market price. Watch our interactive dashboard analysis at Expedia earnings preview: what to expect in the second quarter? for more details.

(1) Revenue expected ahead of consensus estimates

Trefis estimates Expedia’s Q2 2022 revenue at around $3.2 Bill, 7% higher than the consensus estimate. In the first quarter, Expedia revenue grew 81% year-over-year (year-over-year) to $2.25 billion, driven by a 58% year-over-year increase in gross bookings. However, the company’s gross bookings were still down 17% from the pre-pandemic period, and net losses continued into the first quarter. The majority of Expedia’s revenue came from accommodation, which grew 78% year-over-year. In addition, the travel agency recorded significant growth in its advertising and media revenues, and its air travel-related sales increased by 50% compared to last year. For the full year 2022, we forecast revenue from Expedia grow 39% year-on-year to $11.9 billion.

(2) EPS likely to comfortably beat consensus estimates

Expedia’s earnings per share (EPS) in the second quarter of 2022 are expected to come in at $1.72 according to Trefis analysis, comfortably beating the consensus estimate. The travel company continued to report a loss of adjusted earnings per share to $0.47 in the first quarter. However, this is an improvement from the company’s loss of $2.02 per share in the year-ago quarter. It should be noted that first quarter adjusted pretax operating losses were still the same as three years ago, demonstrating Expedia’s ability to control costs even with lower revenues (compared to business levels). before the pandemic).

(3) Stock price estimate higher than current market price

Based on our valuation of Expedia, with an EPS estimate of around $7.32 and a P/E multiple of around 19.7x for FY2022, this translates to a price of $144, or 40% more than the current market price.

It helps to see how your peers compare. EXPE Peers shows how Expedia compares to its peers on important metrics. You can find other useful comparisons for companies in all industries on Peer Comparisons.

With inflation rising and the Fed raising interest rates, Expedia has fallen 43% this year. Can it fall more? See how low EXPE stock can go by comparing its drop in previous stock market crashes. Here is a summary of how all stocks performed during previous stock market crashes.

What if you were looking for a more balanced portfolio instead? Our quality portfolio and multi-strategy portfolio have consistently beaten the market since late 2016.

Return August 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
Back EXPE -2% -43% -8%
S&P 500 return -2% -15% 82%
Trefis Multi-Strategy Portfolio 0% -13% 242%

[1] Cumulative monthly and cumulative annual as of 03/08/2022
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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