Why Ctrip.com International (CTRP) Stock Is Down This Morning

NEW YORK (TheStreet) -- Shares of Ctrip.com International Ltd. (CTRP) are lower by -2.98% to $57.32 in early trading Tuesday morning following a ratings downgrade to "hold" from "buy" at Stifel Financial Corp. (SF).

The firm said it dropped its rating on the travel service provider based on the company's announcement it is reducing ticketing commission rates to 2% from 3% for domestic flights booked by travel agents.

Stifel is expecting more airlines to make this change as well and lowered its rating to express expectations of lower base commissions.

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Separately, TheStreet Ratings team rates CTRIP.COM INTL LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CTRIP.COM INTL LTD (CTRP) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share."

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

  • The revenue growth greatly exceeded the industry average of 4.4%. Since the same quarter one year prior, revenues rose by 36.2%. 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, CTRP's share price has jumped by 74.40%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • CTRP's debt-to-equity ratio of 0.80 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CTRP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.93 is high and demonstrates strong liquidity.
  • CTRIP.COM INTL LTD's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CTRIP.COM INTL LTD increased its bottom line by earning $1.12 versus $0.80 in the prior year. For the next year, the market is expecting a contraction of 34.8% in earnings ($0.73 versus $1.12).
  • 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 24.9% when compared to the same quarter one year ago, dropping from $24.71 million to $18.56 million.
  • You can view the full analysis from the report here: CTRP Ratings Report
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