Expedia Is Still Handing Owners A Bigger Slice, Just More Slowly

Near the top of its range, the share retirement that lets per-share earnings outrun profits has itself eased.

Expedia (EXPE) is trading slightly below the top of a 52-week high range of $331.31, up 63% over the past year. Much of the attention is on whether bookings growth holds through the second half of 2026. A second engine gets less airtime, and it is why per-share earnings have outrun profits: a share count that keeps shrinking. It is still shrinking, and more slowly than it was.

Earnings Per Share Outran Profits By Ten Points A Year

Over the last three years net income grew at an average 36.9% a year while earnings per share grew at an average 46.8%. That roughly ten-point gap is arithmetic, not execution: fewer shares divide the profit, so a holder who did nothing ended up owning more of the company. After netting out stock issued to employees, buybacks and dividends came to 4.6% of a $37.8 billion market value over the trailing twelve months. The pace is easing, though. The count came down about 6.5% a year on average over three years and 4.9% over the past twelve months, and in the June quarter Expedia spent $200 million buying stock at an average price of $226. Management calls its repurchases opportunistic.

Suppliers Fund Both The Float And The Promotions

What pays for the buyback is not the operating margin. That margin is 17.4% against a free cash flow margin of 28.4%, and part of that gap is how a marketplace holds money: about $3.8 billion of accounts payable is an interest-free float, and the company collects from travelers before it has to pay suppliers. Part of the demand generation is not on the company’s bill either. Expedia expanded its supplier-funded promotions in lodging, and management says more than 40% of Vrbo bookings in the June quarter included partner-funded offers. None of the payout is borrowed: free cash flow covers it about 2.1 times over, and Expedia holds more cash than debt. A self-funding balance sheet of that kind is what the Trefis High Quality Portfolio insists on in the businesses it holds.

Fairly Priced, And Lapping Its Own Cost Cuts

Is the price still interesting? On balance yes, with the easy part behind it. A 185% price return over three years against 80% for the S&P 500 says the approach has paid, though buybacks are only one driver of it, alongside earnings growth and a changing multiple. The trailing price-to-earnings ratio of 18.5 is not demanding, but reported net income rose 166% year over year in the June quarter against 29% on the adjusted measure, so how cheap that multiple looks depends on which earnings a reader trusts. The tighter question is growth: management guided bookings to 5% to 7% in the third quarter of 2026 after 12% in the June quarter, and expects margin expansion to moderate in that quarter as the company laps a year of its own cost cuts. The multiple is not the number to follow; bookings growth is, alongside the record of what has actually been paid out.

A Shrinking Share Count Cannot Diversify You

Owning a little more of one business each year only helps while that business stays worth owning more of. The Trefis High Quality Portfolio approaches compounding from the other side, spreading it across a set of quality businesses rather than concentrating it in one travel marketplace. That portfolio has a track record of outpacing the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000.