Ctrip.com (CTRP) Victim to Double-Digit Sell-Off

NEW YORK (TheStreet) -- Chinese online travel agent Ctrip.com International (CTRP) plunged during Thursday's trading session, unloading 13.2% to $38.64 by midday. The heavy sell-off so far has no clear direct cause.

Two days earlier, the company announced it would spend more than $100 million to purchase ToursForFun, a rival Chinese-language travel site. This latest purchase is another in a trend of aggressive acquisitions by Ctrip. Last year, the company acquired travel search engine Kuxun, hotel app Economy Hotel Manager and car rental businesses Yongche and eHi Car Services.

A broad sell-off among Chinese equities is being seen, possibly a result of the release of CPI and PPI figures out of China early Thursday morning. Chinese inflation fell 2.5% in December and came in below forecasts of 2.7%. The producer price index fell for its twenty-second consecutive month, dropping 1.4%. 

TheStreet Ratings team rates CTRIP.COM INTL LTD as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate CTRIP.COM INTL LTD (CTRP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 34.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although CTRP's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 81.81% and other important driving factors, this stock has surged by 113.34% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CTRP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for CTRIP.COM INTL LTD is currently very high, coming in at 75.40%. 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, CTRP's net profit margin of 24.20% significantly outperformed against the industry.
  • CTRIP.COM INTL LTD reported significant earnings per share improvement 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, CTRIP.COM INTL LTD reported lower earnings of $0.80 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.80).

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