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TripAdvisor (TRIP) Up 36.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for TripAdvisor (TRIP - Free Report) . Shares have added about 36.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TripAdvisor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

TripAdvisor Misses Q1 Earnings & Revenue Estimates

TripAdvisor Inc. reported adjusted first-quarter 2020 earnings of 7 cents per share, missing the Zacks Consensus Estimate of 12 cents. Also, the reported earnings decreased 81% from the year-ago quarter.

Revenues in the first quarter were $278 million, missing the Zacks Consensus Estimate by 3.6%. Also, the top line was down 26% year over year.

Revenue Segments

Starting first-quarter 2019, TripAdvisor revised the reporting structure into three segments: Hotels, Media & Platform, Experiences & Dining, and Other.

Revenues of $169 million (accounting for 61% of total revenues) from the Hotels, Media & Platform segment were down 33% from the year-ago quarter.

Revenues of $83 million from the Experiences & Dining segment, which accounted for 30% of total revenues, grew 4% year over year. The company will likely continue to invest in supply and marketing to accelerate E&D products, as well as drive attractive returns in the long run.

The Other segment contributed the remaining 9% to total revenues. This segment includes revenues from rentals, SmarterTravel, Flights/Cruise and TripAdvisor China. Revenues from this segment were $26 million, down 38% from the year-ago quarter.

Operating Results

TripAdvisor’s adjusted operating expenses of $254 million were down 13.3% from $293 million a year ago. Operating margin was (9.7%) in the first quarter versus 8.2% in the year-ago period.

On a GAAP basis, the company recorded net loss of $16 million or loss of 12 cents per share versus net income of $26 million or earnings of 18 cents in the prior-year quarter.

Balance Sheet & Cash Flow

TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $798 million, up from $319 million recorded in the fourth quarter. During March, the company borrowed $700 million from the revolving credit facility in a bid to enhance liquidity.

Accounts receivables were $159 million, down from $183 million in the fourth quarter.

Cash flow from operations was ($70) million versus $59 million in the fourth quarter. Capex was $20 million, down from $22 million in the fourth quarter. Free cash flow was ($90) million in the first quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -90.54% due to these changes.

VGM Scores

At this time, TripAdvisor has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise TripAdvisor has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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