Will Tripadvisor Stock See Gains Post Q2?

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Trefis
TRIP: Tripadvisor logo
TRIP
Tripadvisor

Tripadvisor (NASDAQ: TRIP), an online travel company providing booking for hotel reservations, transportation, lodging, travel experiences, and restaurants, is scheduled to announce its fiscal second-quarter results on Thursday, August 3. We expect Tripadvisor’s stock to likely trade higher due to revenue matching and earnings beating consensus estimates. TRIP experienced a recovery in travel demand and strong growth in gross bookings from pre-Covid levels in 2022. However, the company’s rising costs have been impacting the company’s profitability as also seen in Q1 2023. Although, Tripadvisor’s Viator segment appears to be growing rapidly and is now making up a significant portion of total revenue. Additionally, the company appears to have ample liquidity with $1.1 billion in cash on the balance sheet, and about $500 million and $345 million in long-term debt maturities in 2025 and 2026, respectively.

Our forecast indicates that Tripadvisor’s valuation is at $20 per share, which is 10% higher than the current market price. Look at our interactive dashboard analysis on Tripadvisor Earnings Preview: What To Expect in Q2? for more details.

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(1) Revenues expected to come in line with consensus estimates

Trefis estimates Tripadvisor’s Q2 2023 revenues to be around $475 Mil, in line with the consensus estimate. Tripadvisor’s sales shot higher in the Q1 period as compared to pandemic-pressured results a year ago. The company’s revenues rose 42% year-over-year (y-o-y) to $371 million, and beat market expectations by $11 million. The Viator segment delivered a particularly strong performance as revenue more than doubled y-o-y to $115 million. For the full year 2023, we expect Tripadvisor revenues to rise 16% y-o-y to $1.7 billion.

(2) EPS likely to marginally beat consensus estimates

Tripadvisor’s Q2 2023 earnings per share (EPS) is expected to come in at 36 cents as per Trefis analysis, slightly beating the consensus estimate. Despite a higher revenue base, the business wasn’t able to profit from it. For the first quarter, the travel platform posted $0.05 in adjusted earnings per share, one cent short of expectations. Its GAAP earnings came in at a loss of $0.52 in Q1 2023 compared to a loss of $0.24 in Q1 2022. The company spent aggressively on marketing and technology development, especially in the Viator and core Tripadvisor platforms.

(3) Stock price estimate higher than current market price

Going by our Tripadvisor’s Valuation, with an EPS estimate of around $1.24 and a P/E multiple of around 16.1x in fiscal 2023, this translates into a price of $20, which is 10% almost higher than the current market price.

It is helpful to see how its peers stack up. TRIP Peers shows how Tripadvisor’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.

Returns Jul 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 TRIP Return 10% 1% -61%
 S&P 500 Return 3% 19% 105%
 Trefis Multi-Strategy Portfolio 7% 28% 310%

[1] Month-to-date and year-to-date as of 7/31/2023
[2] Cumulative total returns since the end of 2016

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