EXPE Is Producing Cash, What Is Holding You Back?
Here is why we think Expedia (EXPE) is worth a look
- Cash Yield: Not many stocks offer free cash flow yield of 7.4%, but EXPE does
- Fundamentals: 3-Year average revenue growth of 9.6% and operating margin of 11.6% show good fundamentals
- Valuation: At PE of 24.2, this combo of cash yield, revenue growth, and margin could get noticed
- Compared to S&P, while you get higher valuation, you further get higher revenue growth, but lower margins
Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, Expedia operates as an online travel company offering retail, B2B, and trivago services with a portfolio including full-service and localized travel brands like Hotels.com, Vrbo, Orbitz, and Travelocity.
| EXPE | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Hotels, Resorts & Cruise Lines | – |
| Free Cash Flow Yield | 7.4% | 3.8% |
| Revenue Growth LTM | 5.7% | 5.2% |
| Revenue Growth 3YAVG | 9.6% | 5.2% |
| Operating Margin LTM | 12.1% | 18.8% |
| Operating Margin 3YAVG | 11.6% | 17.8% |
| PE Ratio | 24.2 | 24.0 |
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
- Why Expedia Stock Is Soaring After Q3 Results?
- Better Value & Growth: CCL Leads Expedia Stock
- Better Bet Than Expedia Stock: Pay Less To Get More From CCL
- With EXPE Up 19% in a Month, Is It Time to Compare It Against CCL?
- Better Bet Than Expedia Stock: Pay Less To Get More From CCL
- S&P 500 Stocks Trading At 52-Week High
The Point? The Market Can Notice, And Reward
Here are some stocks that showed strong cash flow yield in mid 2024, and saw strong returns in the subsequent 12 months
- FFIV gained 70% in a year after showing a 6.9% free cash flow yield
- CSCO had 6.6% yield, and returned 50% in the next 12 months
- PM rose over 85% percent as the market noticed its 5.7% free cash flow yield and good underlying revenue growth
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.
Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year 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.