What To Expect From Expedia Stock Post Q4?

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Expedia (NASDAQ: EXPE), a travel company providing everything from airline tickets, hotel rooms, car rentals, to cruises, is scheduled to announce its fiscal fourth-quarter results on Thursday, February 10. We expect Expedia’s stock to likely see little to no movement due to revenues beating consensus estimates but earnings marginally falling short. Expedia benefited from mass vaccinations and noticed encouraging trends in booking rates in the countries where vaccine distribution was higher. It should be noted that the Delta variant impacted cancellations and booking trends at the beginning of Q3, but the fears began to wane in the back half of September. Expedia reorganized its marketing strategy by combining brand teams, such as those at Expedia, Hotels.com, and Vrbo, which previously worked separately. EXPE saw improvements in all segments in Q3 and this trend should continue into the fourth quarter as well. While the latest emergence of the omicron variant again mounted fears of another wave of the pandemic, signs that this variant might be causing milder symptoms than previous strains was a sigh of relief to the travel companies.

Our forecast indicates that Expedia’s valuation is $191 per share, which is slightly lower than the current market price. Look at our interactive dashboard analysis on Expedia Earnings Preview: What To Expect in Q4? for more details.

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(1) Revenues expected to be slightly ahead of the consensus estimates

Trefis estimates Expedia’s Q4 2021 revenues to be around $2.4 Bil, slightly higher than the consensus estimate. In the recent Q3, Expedia’s revenues almost grew two times year-over-year (y-o-y) to $3 billion and grew 40% sequentially from Q2 2021. However, booking trends for lodging, air, and other travel products all declined sequentially from the second quarter of 2021 largely due to the impact of the Covid Delta variant. For the full year 2021, we expect Expedia Revenues to grow 69% y-o-y to $8.8 billion.

(2) EPS likely to miss consensus estimates marginally

Expedia’s Q4 2021 earnings per share (EPS) is expected to come in at 66 cents as per Trefis analysis, marginally lower than the consensus estimate. The travel company reported earnings at a profit of $2.40 in Q3 as compared to a loss of $1.56 in the same period last year. In fact, Expedia’s net income and adjusted EBITDA nearly matched Q3 2019 levels, driven by Vrbo and domestic travel improvements. EXPE’s operating margin was 20% in Q3 comparable to the 17% in Q3 2019, largely driven by cost cuts by the company.

(3) Stock price estimate slightly lower than the current market price

Going by our Expedia’s Valuation, with a revenue per share (RPS) estimate of around $62.40 and P/S multiple of around 3.1x in fiscal 2021, this translates into a price of $191, which is marginally lower than the current market price.

It is helpful to see how its peers stack up. EXPE Peers shows how Expedia compares against its peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Feb 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 EXPE Return 6% 7% 71%
 S&P 500 Return 0% -5% 102%
 Trefis MS Portfolio Return 0% -9% 258%

[1] Month-to-date and year-to-date as of 2/9/2022
[2] Cumulative total returns since the end of 2016

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