Expedia Group Inc (EXPE, Financial), a prominent player in the travel and leisure industry, has recently witnessed a significant uptick in its stock performance. Over the past week, the company's stock price has surged by 10.47%, and over the last three months, it has seen an impressive 13.37% increase. Currently, Expedia holds a market capitalization of $16.65 billion. According to GuruFocus's valuation metrics, the stock is modestly undervalued with a GF Value of $153.03, a slight decrease from $158.61 three months ago.
Overview of Expedia Group Inc
Expedia Group Inc, the world's second-largest online travel agency by bookings, offers a diverse range of services including lodging, air tickets, rental cars, and more. The company operates several well-known brands such as Expedia, Hotels.com, and Vrbo, with lodging making up 80% of its total sales in 2023. Transaction fees from online bookings form the core of Expedia's revenue and profits.
Robust Profitability in the Travel Sector
Expedia's financial health is reflected in its strong Profitability Rank of 7/10. The company boasts an Operating Margin of 11.80%, which is higher than 62.04% of its peers in the industry. Additionally, its Return on Equity (ROE) stands at an impressive 52.48%, surpassing 92.54% of competitors. Other notable metrics include a Return on Assets (ROA) of 3.37% and a Return on Invested Capital (ROIC) of 5.07%, both of which are commendably higher than more than half of the industry. Expedia has maintained profitability for 9 out of the past 10 years, outperforming 86.85% of its peers.
Steady Growth Trajectory
Expedia's Growth Rank is 6/10, indicating moderate growth prospects. The company has achieved a 3-Year Revenue Growth Rate per Share of 32.50%, which is higher than 66.88% of the industry. Although the 5-Year Revenue Growth Rate per Share is lower at 2.50%, it still surpasses 57.08% of its competitors. Looking ahead, analysts estimate a future revenue growth rate of 7.51% and an EPS growth rate of 24.35% over the next 3 to 5 years, both metrics showcasing potential for sustained growth.
Investor Confidence Highlighted by Major Stakeholders
Notable investors have shown confidence in Expedia's potential. ValueAct Capital (Trades, Portfolio) holds 3,414,568 shares, representing 2.58% of the company, while Ken Fisher (Trades, Portfolio) owns 1,485,979 shares, or 1.12%. Larry Robbins (Trades, Portfolio) also holds a significant stake with 614,438 shares, accounting for 0.46% of the company. These investments underscore a strong belief in Expedia's financial health and future prospects.
Competitive Landscape
Expedia operates in a competitive market, with key players including Viking Holdings Ltd (VIK, Financial) with a market cap of $14.43 billion, Carnival Corp (CCL, Financial) valued at $19.25 billion, and MakeMyTrip Ltd (MMYT, Financial) at $10.4 billion. Despite the stiff competition, Expedia's robust profitability metrics and growth prospects position it favorably within the industry.
Conclusion
Expedia Group Inc's recent stock performance and modest undervaluation suggest it is a potential target for value investors. The company's strong profitability metrics and moderate growth prospects, combined with significant investments from prominent holders, position Expedia favorably within the competitive travel and leisure industry. As the world continues to embrace travel post-pandemic, Expedia's diverse service offerings and strategic brand positioning are expected to drive further growth and investor interest in the coming years.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
