Why Ctrip.com (CTRP) Is Up Today

NEW YORK (TheStreet) -- Ctrip.com (CTRP) was rising 8.22% to $45.15 on Thursday after the Chinese travel agency reported fourth-quarter earnings that beat analysts' estimates.

Revenue for the quarter totaled $238 million, a 31% year-over-year increase. Diluted earnings per American Depositary Share were 39 cents, which beat the consensus estimate of 35 cents, according to Barron's. Net income was $43 million, a 36% year-over-year increase.

Despite the report, Oppenheimer lowered its target price on Ctrip because the company "guides 10% non-GAAP margin for 1Q14, a historical low, due to aggressive spending in brand campaign and product development, plus 15-20% hotel coupon costs (though stabilizing)," according to the firm's research note. It lowered its target price to $50 from $65 and reduced its earnings per share estimate given the Ctrip's margin outlook for 2014; however, Oppenheimer noted, "CTRP remains a major player in China's OTA market and we stay positive about its long-term growth prospects."

Must ReadTrade-Ideas: Ctrip.com International (CTRP) Is Today's "Storm The Castle" Stock

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

"We rate CTRIP.COM INTL LTD (CTRP) 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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, compelling growth in net income and expanding profit margins. 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 15.3%. 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.
  • CTRP's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. 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 78.28% 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 97.6% when compared to the same quarter one year prior, rising from $30.84 million to $60.95 million.
  • 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.
  • You can view the full analysis from the report here: CTRP Ratings Report

More from Markets

Dow Drops Over 100 Points on Trade War Worries

Dow Drops Over 100 Points on Trade War Worries

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

What Angela Merkel's Uncertain Political Future Means for Greece's Debt Woes

What Angela Merkel's Uncertain Political Future Means for Greece's Debt Woes

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists

Goldman Is Bullish on Oil, Sees Demand Outweighing Inventory Concern

Goldman Is Bullish on Oil, Sees Demand Outweighing Inventory Concern