NEW YORK (TheStreet) -- Shares of Ctrip.com International (CTRP) - Get Report are down 3.33% to $81.81 on heavy volume in mid-morning trading Tuesday, after initially surging following the announcement that Priceline Group (PCLN) increased its stake in the Chinese travel site to 10.5%.
Priceline said it will pay for the new $250 million investment with a convertible bond.
"We consider Ctrip a market leader in China and we're investing in a company and a team that we believe fits well with our long-term view of China as a market and the Chinese people as global travelers," said Priceline CEO Darren Huston in a statement.
In August, Priceline announced a $500 million buy-in. The company also has the option to increase its stake in Ctrip.com to 15%.
Shares of Ctrip.com rose more than 5% before the stock market opened this morning.
Last Friday, Ctrip.com announced that it acquired a 37.6% stake in competitor eLong (LONG) for about $400 million. The company acquired the stake from Expedia (EXPE) - Get Report and other selling shareholders.
About 3.64 million shares of Ctrip.com have exchanged hands as of 10:51 a.m. ET today, compared to its average trading volume of about 3.02 million shares a day.
Shanghai-based Ctrip.com International is an online travel agency.
Together with its subsidiaries, the company provides travel services for hotel accommodations, transportation ticketing services, packaged tours, and corporate travel management in China.
Separately, TheStreet Ratings team rates CTRIP.COM INTL LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CTRIP.COM INTL LTD (CTRP) 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, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, 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 19.0%. Since the same quarter one year prior, revenues rose by 46.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, CTRP's share price has jumped by 30.51%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for CTRIP.COM INTL LTD is rather high; currently it is at 69.56%. Regardless of CTRP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -5.44% trails the industry average.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, CTRIP.COM INTL LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 209.5% when compared to the same quarter one year ago, falling from $18.56 million to -$20.32 million.
- You can view the full analysis from the report here: CTRP Ratings Report