Expedia Inc. Stock Buy Recommendation Reiterated (EXPE)

Editor's Note: 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.

NEW YORK ( TheStreet) -- Expedia (Nasdaq: EXPE) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, attractive valuation levels, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:
  • Compared to its closing price of one year ago, EXPE's share price has jumped by 111.83%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, EXPE should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 20.2%. Since the same quarter one year prior, revenues rose by 17.5%. 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.
  • Net operating cash flow has significantly increased by 835.47% to $53.31 million when compared to the same quarter last year. In addition, EXPEDIA INC has also vastly surpassed the industry average cash flow growth rate of 17.39%.
  • The gross profit margin for EXPEDIA INC is currently very high, coming in at 83.30%. Regardless of EXPE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EXPE's net profit margin of 14.30% significantly outperformed against the industry.

Expedia, Inc., together with its subsidiaries, operates as an online travel company in the United States and internationally. Expedia has a market cap of $7.67 billion and is part of the services sector and leisure industry. The company has a P/E ratio of 24.5, above the S&P 500 P/E ratio of 17.7. Shares are up 2.3% year to date as of the close of trading on Friday.

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.

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