Expedia Inc Stock Downgraded (EXPE)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Expedia (Nasdaq: EXPE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • EXPE's revenue growth has slightly outpaced the industry average of 11.4%. Since the same quarter one year prior, revenues rose by 18.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • EXPEDIA INC 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, EXPEDIA INC reported lower earnings of $1.66 versus $2.16 in the prior year. This year, the market expects an improvement in earnings ($3.76 versus $1.66).
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that EXPE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.62 is low and demonstrates weak liquidity.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet & Catalog Retail industry and the overall market, EXPEDIA INC's return on equity is below that of both the industry average and the S&P 500.

Expedia, Inc., together with its subsidiaries, operates as an online travel company in the United States and internationally. Expedia has a market cap of $8.42 billion and is part of the services sector and leisure industry. Shares are up 5.6% year to date as of the close of trading on Wednesday.

You can view the full Expedia Ratings Report or get investment ideas from our investment research center.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

Roku, Nucana and Other IPOs That Should Be on Your Radar in 2017

3 Tech Setups That Look Tantalizing

4 Nice Setups for a Monday Morning

Google's Awkward Relationship With Uber Could Get Even More Complicated

Amazon's Jeff Bezos May Have a Challenger for Biggest Biceps in Silicon Valley