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Why Expedia (EXPE) Stock Is Up After-Hours Today

Stocks in this article: EXPE

NEW YORK (TheStreet) -- Expedia (EXPE) was gaining 1.1% to $74.65 in after-hours trading Thursday after beating analysts' estimates for earnings in the first quarter.

For the first quarter Expedia reported earnings of 16 cents a share, beating analysts' expectations of 15 cents a share by 1 cent. Revenue grew 18.85 year-over-year to $1.2 billion for the quarter. Analysts surveyed by Thomson Reuters expected $1.8 billion in revenue.

Hotel revenue rose 12% from the year-ago quarter, while room nights stayed increased 24%. Revenue per room night fell 10%, however, "primarily due to efforts to expand the size and availability of the global hotel supply portfolio, including contracts signed as part of the Expedia Traveler Preference (ETP) program, promotional activities such as growing loyalty programs and couponing, in addition to continued hotel mix shift to Asia-Pacific."

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TheStreet Ratings team rates EXPEDIA INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXPEDIA INC (EXPE) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 18.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has slightly increased to -$212.22 million or 2.08% when compared to the same quarter last year. Despite an increase in cash flow, EXPEDIA INC's cash flow growth rate is still lower than the industry average growth rate of 28.22%.
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that EXPE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.62 is low and demonstrates weak liquidity.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet & Catalog Retail industry and the overall market, EXPEDIA INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: EXPE Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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