Expedia Group, Inc. (EXPE Quick QuoteEXPE - Free Report) is riding last year's momentum in the travel industry into 2023. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in 2023 and 2024 as the travel industry puts the pandemic behind it.

Expedia is a global travel platform. It has three business segments: Expedia Product and Technology, Expedia Brands and Expedia for Business.

It's brands includes Expedia, Hotels.com, Expedia Partner Solutions, Vrbo, trivago, Orbitz, Travelocity, Hotwire, Wotfi, ebookers, CheapTickets, Expedia Group Media Solutions, CarRentals.com, and Expedia Cruises.

A Surprising Miss in the Fourth Quarter of 2022

On Feb 9, 2023, Expedia reported fourth quarter and full year 2022 results. It posted a big miss on the fourth quarter, reporting $1.26 versus the consensus of $1.85. That's a 31% miss.

With travel demand so strong, what went wrong?

Expedia said the quarter was negatively impacted by severe weather but that demand was "markedly stronger" since the start of the year.

2022 was a strong rebound year coming out of the pandemic downturn. Booked room nights were up 26% and revenue gained 36% last year.

"We begin ‘23 with record app usage and member counts, led by Expedia US, the first of our brands to deploy new capabilities and marketing strategies. This year, we are excited to see these benefits accrue to more of our brands and geographies, driving further growth and margin
expansion," said Peter Kern, CEO.

Earnings Estimates for 2023 and 2024 on the Rise

The analysts are still bullish on travel, and Expedia, for the next two years. Demand is still strong.

3 estimates are up for 2023 in the last 30 days, although 1 estimate has also been cut, pushing up the Zacks Consensus Estimate to $9.23 from $8.97 during that time.

This is earnings growth of 35.9% over 2022 as Expedia only earned $6.79 last year.

Analysts expect further growth in 2024 as well. The 2024 Zacks Consensus Estimate is up in the last 30 days to $11.64 from $10.79. That's another 26% earnings growth.

Here's what the earnings turnaround looks like on the chart.

Image Source: Zacks Investment Research

Shares are Cheap

Expedia shares sold off in 2022 along with the other growth stocks. It declined 47% in the last year.

Image Source: Zacks Investment Research

But, along with the earnings rising, that means the stock is cheap on a classic valuation basis. It has a forward P/E of just 12.6. A P/E under 15 usually indicates value.

Expedia also has a PEG ratio of 0.9. A PEG ratio under 1.0 means a company has both growth and value. It's also a sign the stock is cheap.

Expedia is shareholder friendly and has an ongoing share repurchase program. In the fourth quarter of 2022, it repurchased about 3.7 million shares for $347 million. It has about 18 million share remaining under the authorization.

For investors looking for a value stock in the fast growing travel industry, Expedia is one to keep on your short list.

[In full disclosure, Tracey owns EXPE in Zacks Value Investor portfolio.]