After Q2 Beat, Does Tripadvisor Stock Look Promising?

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TRIP: Tripadvisor logo
TRIP
Tripadvisor

After a 25% growth over the last month, at the current price of around $24 per share, we believe Tripadvisor’s stock (NASDAQ: TRIP), an online travel company providing booking for hotel reservations, transportation, lodging, and travel experiences, could see further gains. TRIP stock has increased from around $19 to $24 in last month, outperforming the broader indices, with the S&P falling about 3% over the same period. The company’s stock traded higher after posting better-than-expected results in the recent second quarter. Tripadvisor reported a quarterly revenue improvement of 77% year-over-year (y-o-y) and its net income flipped well into the black (after reporting a loss of 24 cents in Q1 2022). Also, the company beat estimates on both the top and bottom lines in Q2. That said, the travel industry outlook looks bright for the rest of 2022 as it is clearly benefiting now from the pent-up consumer demand after two years of travel interruptions. This is, of course, if inflationary and recession pressures don’t take over the industry.

In Q2 2022, Tripadvisor’s total revenue came in at $417 million, well ahead of analysts’ consensus estimate of $393 million. During the period, management also realigned its business segments into TripAdvisor Core, Viator, and TheFork, the last two of which are wholly owned brands. To break down the revenue further – Tripadvisor Core revenue jumped 49% y-o-y to $274 million, while Viator, an experience-based brand, grew its top line by 240% to $136 million. Bottom-line results were strong as well, with total adjusted EBITDA jumping from $25 million to $109 million, and adjusted earnings per share coming in at $0.37, compared to analysts’ expectations of a $0.27 profit and a loss of $0.07 per share in the year-ago quarter. It should be noted that the travel recommendation company’s monthly unique user figure was just 83% of the Q2 2019 number. However, Q2 2022 revenue was nearly the same as in Q2 2019, indicating better monetization of users.

We have revised Tripadvisor’s valuation to $26 per share, based on a $0.99 expected EPS and a 26.2x P/E multiple for the fiscal year 2022 – almost 9% higher than the current market price. We forecast Tripadvisor’s Revenues to be $1.45 billion for the fiscal year 2022, up 61% y-o-y. In light of rising interest rates and the threat of recession, the market at the moment is uncertain, but any further decline in the company’s stock could be used as an opportunity to buy.

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For the third quarter, Tripadvisor expects revenue to top 2019 levels by a low-to-mid single-digit percentage and expects an EBITDA margin in the low-to-mid-20% range. Travel is currently on the rebound, and with a new CEO in place, the stock appears more promising than ever.

It is also helpful to see how its peers stack up. Check out how Tripadvisor’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 TRIP Return 25% -13% -49%
 S&P 500 Return -3% -16% 78%
 Trefis Multi-Strategy Portfolio -4% -17% 234%

[1] Month-to-date and year-to-date as of 8/31/2022
[2] Cumulative total returns since the end of 2016

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