Is Wall Street Undervaluing EXPE Stock?

Here is why we think Expedia (EXPE) deserves consideration as a value stock.

• Reasonable Revenue Growth: 5.6% LTM and 13.2% last 3 year average.
• Cash Generative: Nearly 17.3% free cash flow margin and 12.1% operating margin LTM.
• No Major Shocks: EXPE has avoided any large revenue collapses.
• Modest Valuation: Despite encouraging fundamentals, EXPE trades at a PE multiple of 19.8
• Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, and lower margins

Expedia operates as a global online travel company with retail, B2B, and trivago segments, offering services through brands like Expedia, Hotels.com, Vrbo, Orbitz, Travelocity, and CheapTickets.

*LTM: Last Twelve Months

But do these numbers tell the full story? Read Buy or Sell EXPE Stock to see if Expedia still has an edge that holds up under the hood.

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

Stocks Like These Can Outperform. Here Is Data

For 65 similar value stocks chosen as of mid 2024, consider the following stats for the subsequent 1 year period.

• Average peak return of 39.3% vs 14.4% for S&P, with maximum peak return of 133%
• Win rate of 60%; win rate represents % of stocks with positive return
• Average 1-year return of 14.6%, similar to S&P’s despite tariff instability

But Consider The Risk

Expedia’s no exception when it comes to market turmoil. It lost about 83% in the Global Financial Crisis, 63% during the Covid pandemic, and 61% in the recent inflation shock. Even the 2018 correction wasn’t mild, with a nearly 40% drop. Good fundamentals matter, but in big sell-offs, this kind of volatility shows the risks investors face.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read EXPE Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. 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.