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Expedia Inc. Stock Upgraded (EXPE)

NEW YORK (TheStreet) -- Expedia (Nasdaq:EXPE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.2%. Since the same quarter one year prior, revenues rose by 13.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $552.78 million or 12.65% when compared to the same quarter last year. In addition, EXPEDIA INC has also modestly surpassed the industry average cash flow growth rate of 9.86%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market on the basis of return on equity, EXPEDIA INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • EXPEDIA INC has improved earnings per share by 18.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EXPEDIA INC reported lower earnings of $2.36 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $2.36).

Expedia, Inc., together with its subsidiaries, operates as an online travel company in the United States and internationally. The company has a P/E ratio of 17.1, above the average leisure industry P/E ratio of 15.2 and below the S&P 500 P/E ratio of 17.7. Expedia has a market cap of $5.22 billion and is part of the services sector and leisure industry. Shares are up 14.8% year to date as of the close of trading on Monday.

You can view the full Expedia Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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