NEW YORK (ETF Expert) -- The battle for both the tourist and business travel dollars is heating up as the economy recovers, and the market seems to favor Expedia (EXPE) - Get Expedia Group Inc. Report as the place to invest.
On its recent earnings report the online travel business reported 22% more tickets sold year over year with a 14% increase in revenue and 21% increase to the bottom line. The stock price has jumped.
Most of you should have seen this coming as the stock's price momentum has predicted the travel recovery. During the past year, while the market as measured by the
Value Line Index
was up 12%, Expedia's price took wings and soared 109% as this graph provided by Barchart shows:
Expedia, together with its subsidiaries, operates as an online travel company in the United States and internationally. It provides travel products and services to leisure and corporate travelers, offline retail travel agents, and travel service providers through a portfolio of brands, including Expedia.com, hotels.com, Hotwire.com, Expedia Affiliate Network, Classic Vacations, Expedia Local Expert, Expedia CruiseShipCenters, Egencia, eLong, Inc., and Venere Net SpA.
The company's travel offerings consist of airline tickets, hotel rooms, car rentals, destination services, cruises, and package travel provided by various commercial airlines, lodging properties, car rental companies, destination service providers, cruise lines, and other travel product and service companies on a stand-alone and package basis. It also facilitates the booking of hotel rooms, airline seats, car rentals, and destination services from its travel suppliers; and acts as an agent in the transaction, passing reservations booked by its travelers to the relevant travel provider. The company was founded in 1996 and is headquartered in Bellevue, Wash. (Yahoo Finance profile)
Factors to consider
(technical indicators provided by Barchart): The stock earned an 88% Barchart technical buy signal but gets an hold from the Trend Spotter. If the present price momentum holds this could turn to a buy signal by the end of today.
The price is above its 20-, 50- and 100-day moving average, with the stock hitting four new highs and up 1.87% in the last month. The Relative Strength Index is 61.93% and Barchart computes a technical support level at 49.36. The stock recently traded at $58.57, which is above its 50-day moving average of $54.65.
: Wall Street has noticed the company's recent earnings report and 18 firms have assigned 25 analysts to predict the company's numbers. They project an increase in revenue of 13.8% for this year and another 11.4% for next year. Earnings are estimated to increase by 9.1% this year, an additional 18.3% next year and continue to increase annually at a rate of 12.81% for the next five years.
At these growth rates the 17.37 P/E ratio is not much higher than the market's P/E of 15.50. The dividend rate of about 1% is only 15% of projected earnings. The financial strength is B+ and
rates this a B- stock.
: Analysts have issued one strong buy, six buy, 16 hold and two underperform recommendations on the stock and estimate investors could see a 10% to 12% annual total return over the next five years. The individual investors reading
had 440 readers give the stock a 78% vote of confidence to beat the market. I'd especially like to note how fast the short sellers are covering their positions which have dropped from five million share in July to less tah 2.5 million share recently.
:Over the past year the market voted in Expedia's favor also, and while its price was up 109%,
was up 17%,
was up 21% and
was down 2% since opening earlier this year.
Priceline.com has a P/E of 21.52 and an A financial strength rating.
rates the stock an A- and analysts look for a revenue increase of 16.20% next year and earnings to increase by 20.89% annually for the next five years.
Orbitz Worldwide has a P/E of 17.50 and a financial strength of C+.
rates it a C- stock and revenue should increase by 5.9% next year and earnings are estimated to continue to increase at an annual rate of 10% over the next five years.
Kayak has not had a full year to report yet but is expected to have revenue increases of 24.5% this year and increase earnings annually by around 21.71% over the next five years.
: Expedia is a triple D stock with analysts projecting double-digit increases in revenue, earnings and stock price. P/E is not out of line with the growth projections. Please watch the recent price increase for continued momentum. As always, if you jump in now watch the 20-, 50- and 100-day moving averages and the 14-day turtle channels for weakness and overbuying:
This article was written by an independent contributor, separate from TheStreet's regular news coverage.