Is Expedia Stock Undervalued Stock Or Value Trap?
Expedia (EXPE) stock is at an interesting point right now. It is trading cheap, and if you bet on it, you are betting on a company that’s growing reasonably, is sustaining good cash flow and margin, has low-debt capital structure, and is relatively cheaply valued. But is that enough?
Why Bet On EXPE Now?
The primary driver for Expedia’s stock re-rating is the accelerating growth of its high-margin B2B segment. This business is transforming Expedia from a competitive B2C Online Travel Agency into a more durable, technology-driven platform with stickier revenue streams, justifying a higher valuation multiple.
- B2B segment revenue grew 24% YoY in Q4 2025, significantly outpacing the B2C segment’s 4% growth.
- B2B now accounts for 37% of total revenue, a meaningful and growing portion of the business.
- The B2B segment has achieved 18 consecutive quarters of double-digit growth, demonstrating durable momentum.
- Key B2B partnerships include major brands like Walmart, United Airlines, and Chase Travel, validating the platform’s value proposition.
How Do The Fundamentals Look?
- Revenue Growth: 7.6% LTM and 8.1% last 3 year average.
- Operating Margin: Nearly 12.9% 3-year average operating margin.
- No Margin Shock: Expedia has improved in the last 12 months.
- Modest Valuation: Despite these fundamentals, EXPE stock trades at a PE multiple of 19.3
Below is a quick comparison of EXPE fundamentals with S&P medians.
| EXPE | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Hotels, Resorts & Cruise Lines | – |
| PE Ratio | 19.3 | 25.0 |
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|
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| LTM* Revenue Growth | 7.6% | 6.4% |
| 3Y Average Annual Revenue Growth | 8.1% | 5.4% |
| LTM Operating Margin Change | 2.5% | 0.2% |
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| LTM* Operating Margin | 14.7% | 18.8% |
| 3Y Average Operating Margin | 12.9% | 18.2% |
| LTM* Free Cash Flow Margin | 21.1% | 14.0% |
*LTM: Last Twelve Months
The Bear View & The Current Investment Debate
The current investment debate on EXPEis centered around: Can the high-growth, high-margin B2B segment drive a stock re-rating faster than reinvestment costs and a decelerating B2C core drag on overall profitability?
The prevailing sentiment is neutral. The powerful B2B growth engine (+24%) is undeniable. But management’s tepid margin guidance and the sluggish B2C core keep conviction in check. The story is good, but the numbers require a ‘show-me’ quarter.
| Bull View | Bear View |
|---|---|
| B2B segment’s 24% YoY growth is structurally accretive to margins and FCF, justifying a higher multiple as it becomes a larger part of the business. | Cautious FY26 margin guidance (100-125 bps expansion) signals heavy investment is required, while the core B2C business’s 4% growth shows structural weakness. |
You can evaluate more on which view to bet on by visiting EXPE Investment Highlights & Full Analysis
EXPE Is Just One of Several Such Stocks
Not ready to act on EXPE? Consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Meaningfully below 1Y high
- Current P/S < last few year average
- Strong operating margin
- P/E ratio below S&P 500 median
A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:
- Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
- Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
- Strategy consistent across market cycles
Portfolios Over Individual Stock Picks
Individual stocks are unpredictable. A smart portfolio helps you invest, limits downside shocks, and provides upside exposure.
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? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as evident in HQ Portfolio performance metrics.