Expedia (NASDAQ: EXPE), a travel company providing everything from airline tickets, hotel rooms, car rentals, to cruises, is scheduled to announce its fiscal second-quarter results on Thursday, August 4. We expect Expedia’s stock to likely trade higher due to revenues and earnings beating consensus estimates. The company’s stock traded 43% lower this year due to anxiety over a potential recession, staffing issues with airlines, and higher interest rates. The broader concern over the global economy’s health and renewed Covid restrictions in some regions of China gave rise to worries that travel demand could decline over the coming quarters after rebounding this summer. We believe that the pent-up travel demand after almost two years of deeply depressed travel volume will set the path for 2022. The company shared its sales trends by month on a conference call with investors, explaining that hotel bookings were down by 11% in January, but up by 8% in February, 7% in March, and 10% in April. In light of these trends, Expedia may see favorable booking growth in Q2. The company’s Q2 report should likely 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, which is 40% higher than the current market price. Look at our interactive dashboard analysis on Expedia Earnings Preview: What To Expect in Q2? for more details.
(1) Revenues expected to be ahead of the consensus estimates
Trefis estimates Expedia’s Q2 2022 revenues to be around $3.2 Bil, 7% higher than the consensus estimate. In Q1, Expedia’s revenues grew 81% year-over-year (y-o-y) to $2.25 billion, driven by a 58% y-o-y jump in gross bookings. However, the company’s gross bookings were still down 17% compared to the pre-pandemic period, and net losses continued in Q1. The majority of Expedia’s revenue came from lodging, which was up 78% y-o-y. In addition, the travel company saw significant growth in advertising and media revenue, and air-related sales grew 50% over last year. For the full year of 2022, we expect Expedia Revenues to grow 39% y-o-y to $11.9 billion.
(2) EPS likely to beat consensus estimates comfortably
Expedia’s Q2 2022 earnings per share (EPS) is expected to come in at $1.72 as per Trefis analysis, comfortably beating the consensus estimate. The travel company continued to report a loss in adjusted earnings per share to $0.47 in Q1. However, that was an improvement over the company’s loss of $2.02 per share in the year-ago quarter. It should be noted that the Q1 adjusted pre-tax operating losses were still the same as three years ago, demonstrating Expedia’s ability to control its costs even with weaker revenue (compared to pre-pandemic levels).
(3) Stock price estimate higher than the current market price
Going by our Expedia’s Valuation, with an EPS estimate of around $7.32 and a P/E multiple of around 19.7x in fiscal 2022, this translates into a price of $144, which is 40% higher 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.
With inflation rising and the Fed raising interest rates, Expedia has fallen 43% this year. Can it drop more? See how low can EXPE stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.
|S&P 500 Return||-2%||-15%||82%|
|Trefis Multi-Strategy Portfolio||0%||-13%||242%|
 Month-to-date and year-to-date as of 8/3/2022
 Cumulative total returns since the end of 2016