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Bull of the Day: TripAdvisor (TRIP)

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TripAdvisor, Inc. (TRIP - Free Report) has revamped its travel site for the first time in years to get in on the social media craze.  This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in 2018.

TripAdvisor is one of the world's largest travel sites with 702 million reviews. Its sites are available in 49 markets and sees over 490 million average monthly unique visitors.

It also operates 20 other travel media brands including airfarewatchdog.com, flipkey.com, thefork.com, cruisecritic.com, gateguru.com, housetrip.com, jetsetter.com, oyster.com and viator.com, among others.

Big Earnings Beat in Q3

On Nov 7, TripAdvisor reported its third quarter results and blew by the Zacks Consensus Estimate by $0.25. Earnings were $0.72 versus the consensus of $0.47.

Revenue rose 4% to $458 million although Hotel, its largest segment, fell 2% year-over-year to $305 million, while non-Hotel, which includes Experiences and Restaurants, rose 20% 50 $153 million.

It's Experiences and Restaurants segments saw accelerating growth out of the second quarter.

Revenue per hotel shopper also gained, rising 5%.

New Immersive Site Experience

TripAdvisor is finally recognizing just how valuable and loyal its audience is. In Nov 2018, it announced a new social feature which allows users to post their own experiences in an interactive social media feed.

This type of feed allows for links back to sites and articles created by users. It should encourage content generation on the site by those in the travel industry, including Instagram influencers and travel bloggers.

As of the third quarter, users had uploaded 153 million photos with over 700 million reviews. Why not upload other content like travel articles?

Other than the Forums section, there's little else interactive on the TripAdvisor site that might keep people coming back for more. This new social feature could do the trick.

Analysts also believe it could be a money generator a few years from now with sponsored posts fit into the feed.

It's too soon to know its full impact, however.

Estimates Revised Higher

The analysts like the changes they are seeing in the site and with the growth.

13 estimates have been revised higher for both 2018 and 2019 in the last 30 days. None have been lowered.

The 2018 Zacks Consensus Estimate has jumped to $1.73 from $1.44 in that time. That's earnings growth of 69.6% compared to 2017.

For 2019, the Zacks Consensus Estimate has also soared, up to $1.82 from $1.58, however, that's just another 5% growth.

Shares Soar in 2018

After a tough 2017, the shares have finally turned around and are up 76% year-to-date.

They aren't cheap. TripAdvisor trades with a forward P/E of 33.8. That's pretty pricey.

Some of its competitors, Expedia (EXPE - Free Report) and Booking BKNG">(BKNG), are cheaper on a P/E basis, with those two trading at 19.7x and 19.9x, respectively. But both of them are Zacks Rank #3 (Hold) stocks.



For investors banking on the growth story at TripAdvisor, however, it's one of the travel stocks to keep on the short list.

[In full disclosure, the author of this article owns shares of BKNG in her personal portfolio.]

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