Shares of online travel agency Expedia (EXPE, Financial) surged 4.75% following reports that Uber is considering acquiring the company. The discussions are reportedly in the early stages, and there is no certainty that a deal will be finalized. Expedia's current stock price is $158.01, reflecting a positive investor sentiment regarding the potential acquisition.
Expedia Group Inc (ticker: EXPE), the world's second-largest online travel agency, is seeing a notable lift in its market performance. The company's current GF Value suggests that the stock is fairly valued at approximately $150.28. Investors can view more detailed valuation analysis at GF Value.
Despite this positive potential news of acquisition, the company does have some warning signs to consider. Expedia's Altman Z-Score of 0.94 indicates financial distress, implying there is a possibility of bankruptcy in the next two years. Additionally, the stock's Price-to-Book ratio of 23.24 is close to a 10-year high, which could suggest overvaluation in the context of historical performance.
On the positive side, Expedia shows financial health with a Piotroski F-Score of 7, suggesting a very healthy situation. The company's Beneish M-Score of -2.43 implies that the company is unlikely to be engaging in earnings manipulation, providing additional confidence to investors.
It's important to note that Expedia (EXPE, Financial) has demonstrated solid growth, with a 62.9% increase in earnings over the past year and a 39.1% rise in EBIT. However, the return on invested capital (ROIC) is less than the weighted average cost of capital (WACC), which might suggest inefficiencies in capital deployment.
Overall, while the potential acquisition by Uber adds an attractive speculative element to Expedia's stock, investors should weigh this against the company's current financial indicators and valuation metrics.
