Why Expedia (EXPE) is Up Double Digits Friday

NEW YORK (TheStreet) -- Expedia (EXPE) added double-digit percentage points on Friday, after earnings came in better than expected.

By midmorning, shares had added 13.5% to $73.95.

After the bell Thursday, the online travel site posted quarterly revenue of $1.15 billion, 18% higher year-over-year. The increase in sales was driven by a 25% jump in hotel room nights booked and as advertising sales generated more income.

Washington-based Expedia recorded net income of 92 cents a share, six cents higher than analysts surveyed by Thomson Reuters had expected.

Over fiscal 2013, Expedia earned $3.22, a nickel over consensus, and generated $4.77 billion in sales compared to estimates of $4.75 billion.

Expedia's rally trickled down to its online travel competitors. Tripadvisor (TRIP) led the pack, adding 9.7% to $84.64, Orbitz (OWW) climbed 5.1% to $7.49, and Priceline (PCLN) popped 2.5% to $1,166.45.

Tripadvisor will report fourth-quarter earnings on Tuesday, Feb. 11.

Orbitz reports results on Feb. 13 and Priceline is due for Feb. 20.

Must Read: Expedia Now #412 Largest Company, Surpassing Masco

TheStreet Ratings team rates EXPEDIA INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate EXPEDIA INC (EXPE) a BUY. This is driven by some important positives, 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, attractive valuation levels, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

TheStreet Ratings team rates TRIPADVISOR INC as a Buy with a ratings score of B-. The team has this to say about their recommendation:

"We rate TRIPADVISOR INC (TRIP) a BUY. This is driven by some important positives, 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, solid stock price performance, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • TRIP's revenue growth has slightly outpaced the industry average of 15.7%. Since the same quarter one year prior, revenues rose by 19.9%. 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, TRIP's share price has jumped by 70.89%, 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, TRIP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 89.70% to $145.04 million when compared to the same quarter last year. In addition, TRIPADVISOR INC has also vastly surpassed the industry average cash flow growth rate of 7.98%.
  • The gross profit margin for TRIPADVISOR INC is currently very high, coming in at 97.96%. Regardless of TRIP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TRIP's net profit margin of 21.90% significantly outperformed against the industry.
  • TRIPADVISOR INC's earnings per share declined by 7.3% 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, TRIPADVISOR INC increased its bottom line by earning $1.36 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $1.36).

TheStreet Ratings team rates PRICELINE.COM INC as a Buy with a ratings score of A. The team has this to say about their recommendation:

"We rate PRICELINE.COM INC (PCLN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • The revenue growth came in higher than the industry average of 15.7%. Since the same quarter one year prior, revenues rose by 33.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 34.81% and other important driving factors, this stock has surged by 66.88% 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, PCLN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • PRICELINE.COM INC has improved earnings per share by 34.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PRICELINE.COM INC increased its bottom line by earning $27.71 versus $20.65 in the prior year. This year, the market expects an improvement in earnings ($41.20 versus $27.71).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Internet & Catalog Retail industry average. The net income increased by 39.6% when compared to the same quarter one year prior, rising from $596.59 million to $832.99 million.
  • The gross profit margin for PRICELINE.COM INC is currently very high, coming in at 87.63%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.69% significantly outperformed against the industry average.

TheStreet Ratings team rates ORBITZ WORLDWIDE INC as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate ORBITZ WORLDWIDE INC (OWW) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share."

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

  • 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 decreased by 12.4% when compared to the same quarter one year ago, dropping from $14.82 million to $12.98 million.
  • The debt-to-equity ratio is very high at 13.63 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, ORBITZ WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$28.01 million or 1532.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ORBITZ WORLDWIDE INC's earnings per share declined by 21.4% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ORBITZ WORLDWIDE INC reported poor results of -$2.84 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus -$2.84).

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