Expedia Stock is Up 75% Since 2023. Where Is It Headed Post Q4?

-19.27%
Downside
136
Market
109
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 8. We expect Expedia’s stock to likely trade lower with revenues and earnings missing consensus estimates marginally. The company is benefiting from 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. That said, the company’s stock has gained 43% in the last six months and currently trades at a price-to-earnings ratio of 28x. This is higher than its peers and its historical P/E average.

EXPE stock has witnessed gains of 20% from levels of $130 in early January 2021 to current levels now, vs. an increase of about 30% for the S&P 500 over this roughly 3-year period. However, the increase in EXPE stock has been far from consistent. Returns for the stock were 36% in 2021, -52% in 2022, and 73% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that EXPE underperformed the S&P in 2022. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Consumer Discretionary sector including AMZN, TSLA, and TM, and even for the megacap stars GOOG, MSFT, and AAPL. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could EXPE face a similar situation as it did in 2022 and underperform the S&P over the next 12 months – or will it see a strong jump?

Our forecast indicates that Expedia’s valuation is $109 per share, which is 29% 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 below of the consensus estimates

Trefis estimates Expedia’s Q4 2023 revenues to be around $2.7 Bil, slightly below the consensus estimate. In Q3, the company’s revenue increased 9% year-over-year (y-o-y) to $3.93 billion. Booked room nights rose 9% y-o-y in Q3, driving gross bookings up 7% to around $25.7 billion. Lodging gross bookings at $18.5 billion grew 8% compared to Q3 2022. For the full year of 2023, we expect Expedia Revenues to grow 11% y-o-y to $12.9 billion.

(2) EPS likely to miss consensus estimates marginally 

Expedia’s Q4 2023 earnings per share (EPS) is expected to come in at $1.60 as per Trefis analysis, missing the consensus estimate. On the bottom line, adjusted earnings per share rose 34% y-o-y to $5.41 in Q3. Also, EXPE’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $1.2 billion, growing 13% y-o-y.

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

Going by our Expedia’s Valuation, with an EPS estimate of around $9.56 and a P/E multiple of around 11.4x in fiscal 2023, this translates into a price of $109, which 29% 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.

Returns Feb 2024
MTD [1]
Since start
of 2023 [1]
2017-24
Total [2]
 EXPE Return 4% 75% 36%
 S&P 500 Return 2% 29% 121%
 Trefis Reinforced Value Portfolio 0% 38% 607%

[1] Returns as of 2/7/2024
[2] Cumulative total returns since the end of 2016

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