Expedia Stock To Likely See Little Movement Post Q4

-2.14%
Downside
125
Market
122
Trefis
EXPE: Expedia logo
EXPE
Expedia

Expedia (NASDAQ: EXPE), a travel company providing everything from airline tickets, hotel rooms, and car rentals, to cruises, is scheduled to announce its fiscal fourth-quarter results on Thursday, February 9. We expect Expedia’s stock to likely see little to no movement due to revenues beating consensus estimates but earnings missing marginally. The company is benefiting from strong travel demand that has remained resilient despite macro headwinds. The B2B segment has outperformed Expedia’s retail side in terms of growth, while also driving margins higher. We expect this momentum to continue into Q4 as well. While the company did not provide any financial guidance, management projects that strong demand has continued into Q4 as consumers prioritize travel over other discretionary categories. It also said that bookings for 2023 were outpacing 2019 levels.

Our forecast indicates that Expedia’s valuation is $120 per share, which is in line with 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 2022 revenues to be around $2.7 Bil, slightly higher than the consensus estimate. In Q3, The company’s revenue increased 22% year-over-year (y-o-y) to $3.62 billion. Booked room nights rose 25% to 81.6 million, driving gross bookings up 28% to $24 billion. We believe that the pent-up travel demand, after almost two years of deeply depressed travel volume, should set the path for the year 2023. The company shared its sales trends by month, explaining that lodging gross bookings were down 1% in July, rebounded 9% in August, up 6% in September, and up 5% in October. Both September and October results were impacted by Hurricane Ian. If not for the hurricane, both months would have been relatively in line with the August trend. For the full year of 2022, we expect Expedia Revenues to grow 37% y-o-y to $11.8 billion.

Also, the U.S. unemployment rate remained near historic lows at 3.5% (as of Dec 2022) and the employment cost index (measuring the growth of labor compensation) rose 1.0% through the December-ending quarter, easing fears of a deeper economic slowdown. Both of these factors point to an improvement in Expedia’s upcoming results going forward.

(2) EPS likely to miss consensus estimates marginally 

Expedia’s Q4 2022 earnings per share (EPS) is expected to come in at $1.64 as per Trefis analysis, marginally missing the consensus estimate. In Q3, the company’s adjusted earnings per share rose 15% y-o-y to $4.05, which was still below the consensus at $4.12. However, EXPE’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) topped $1 billion for the first time, increasing 26% y-o-y to $1.08 billion.

(3) Stock price estimate in line with the current market price

Going by our Expedia’s Valuation, with an EPS estimate of around $7.19 and a P/E multiple of around 16.7x in fiscal 2022, this translates into a price of $120, which is in line with 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? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Feb 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 EXPE Return 5% 37% 6%
 S&P 500 Return 2% 8% 86%
 Trefis Multi-Strategy Portfolio 3% 14% 260%

[1] Month-to-date and year-to-date as of 2/8/2023
[2] Cumulative total returns since the end of 2016

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